Young people can't afford cars, substitute feeling of freedom via smart phones, auto sector sees 2 million fewer cars sold/yr. as result

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8/8/12, "Young People Aren't Buying Cars Because They're Buying Smart Phones Instead," TheAtlanticCities.com, J. Weissman

"Youth culture was once car culture. Teens cruised their Thunderbirds to the local drive-in, Springsteen fantasized about racing down Thunder Road, and Ferris Bueller staged a jailbreak from the 'burbs in a red Ferrari. Cars were Friday night. Cars were Hollywood.

Yet these days, they can't even compete with an iPhone - or so car makers, and the people who analyze them for a living, seem to fear. As Bloomberg reported this morning, many in the auto industry "are concerned that financially pressed young people who connect online instead of in person could hold down peak demand by 2 million units each year." In other words, Generation Y may be happy to give up their wheels as long as they have the web. And in the long term, that could mean Americans will buy just 15 million cars and trucks each year, instead of around 17 million.

"A car is a symbol of freedom," one consumer researcher told Bloomberg. "But unlike previous years, there are many different ways that a Gen Y person can capture that freedom."

Young adults are in fact buying fewer cars and trucks today than in the past. According to CNW Marketing Research, Americans between the ages of 21 to 34 purchased just 27 percent of new cars in 2010, down from 38 percent in 1985. Bloomberg quotes the industry analysts at R.L. Polk & Co., who say that "the rate of U.S. auto sales to 18-34-year-old buyers declined to 11 percent in April 2012, down from 17 percent for the same age group in April 2007, before the recession." ...

First, Gen Y is strapped for cash. Badly. Thanks to the recession and slow recovery, it's been slammed with high rates of joblessness. Even college graduates, who have better prospects than most, are still collectively underemployed and staggering around beneath the weight of unprecedented student debt. In the scheme of a young person's budget, a $12,000 Kia and a $2,000 Macbook Pro both count as major life purchase. Given the centrality of the web to everybody's personal and professional lives, the computer (or heck, even a phone) may be the higher priority."...via Zero Hedge

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