Driving is Losing Its Allure for More Americans

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A study published this week by the University of Michigan reports a sharp decline over the past two decades among people under 25 years of age getting their driver’s licenses. 

The drop signals high-schoolers and college-age Americans are less interested in driving than previous generations. And the change is spreading to their parents and grandparents, moves that have auto makers scrambling to ramp up investments in alternative mobility services such car-hailing services.

Since the financial crisis of 2008, the proportion of Americans under 70 years of age holding a driver’s license has declined even as annual U.S. light-vehicle sales have slowly climbed back to levels seen early last decade, University of Michigan researchers Michael Sivak and Brandon Schoettle found.

Licensing statistics are closely watched by auto makers and Silicon Valley companies looking to gain a share of the $7.7 trillion in revenue from automotive sales and transportation services that are generated each year.

As more people move to tightly-packed urban environments and new transportation options emerge, such “changes will have potentially major implications for future transportation and its consequences,” Mr. Sivak said.

Demand for new cars and trucks hit a record 17.5 million last year, with cheap financing, low gasoline prices and steady employment helping lift demand past levels not seen since 2000. market researcher J.D. Power and Associates recently published data showing that sales gains are largely driven by people born after 1977, and that the average age of a new-car buyer fell slightly to 48 in 2015 from 49 a year earlier.

The population, however, has grown 14% during that period and the age of the nation’s existing vehicle fleet has risen—two factors that suggest today’s underlying demand may not be as strong as it was 15 years ago. Rising sales incentives and used-car inventories, analysts say, point to demand plateauing, and heightening the need for car executives to explore alternative revenue streams.

Several auto makers have responded, sinking big investments in autonomous-vehicle projects and partnerships. General Motors Co.recently acquired a handful of assets from ride-sharing firm Sidecar Technologies Inc., which folded operations in December due to a lack of capital. The assets include roughly 20 employees who will now join GM’s San Francisco offices and help accelerate the Detroit auto giant’s effort to partner with car-hailing service Lyft Inc.

Lyft and rival Uber Technologies Inc. gathers millions of data points on driver behavior that could aid in the development of self-driving cars. GM invested $500 million in Lyft earlier this month. 

Among the survey’s notable statistics: 77% of people between the ages of 20 and 24 were licensed to operate a vehicle in 2014, down from about 80% in 2011 and 92% in 1983. Less than a quarter of 16-year-olds today have their licenses, down from 46% in 1983; and 60% of 18-year-olds have one, down from 80% in 1983.

Hasiba Haq, a 23-year-old Brooklyn native, has never had a driver’s license. She said driving in the city is a hassle and takes longer to get around than public transportation. “It’s so much easier to take the subway,” Ms. Haq said, noting that she has a learner’s permit but only to use as identification.

The percentage of people between the ages of 45 and 69 with driver’s licenses had grown in the 25 years since 1983, the University of Michigan researchers said, but that trend hit the brakes in 2008. The proportion of license holders among Americans in their 50s to late 60s is down by roughly 3 percentage points since 2008.

“You still have people passionate about driving,” Mark Wakefield, head of consulting firm AlixPartners LLP’s automotive practice, said. “But you have more people now who are frustrated with driving and have options that didn’t exist in the past.”

This article originally appeared on The Wall Street Journal

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