Is Generation Z really abandoning cars and driving?

Are cars falling out of favour?

The number of passenger cars registered in Europe fell by 10.4% in 2022 to 12.8 million units. The reduction was even more pronounced when compared to 2019; the overall volume was down 29%, with 4.5 million fewer new car registrations.

There is no question that the energy crisis, inflation, the war in Ukraine, and the delay in new cars arriving at dealerships due to a shortage of semiconductors all played a role in the downturn, but is it also true that our love for cars has soured and they are no longer the status symbol they once were?

Every generation has had a distinctive relationship with cars for many years. The 1946–1964 Baby Boom generation, who were born during the post-World War II boom, were the ideal demographic for car manufacturers. The rise in car sales was closely related to their sizable purchasing power and net worth.

The demographic bridge between the Boomers and Millennials is Generation X, born between 1965 and 1980, and the most exclusive of the generations. With only around 65 million worldwide, this cohort is outnumbered when compared to the 75 million Boomers and the 83 million Millennials.

The families of Generation X were distinguished by the fact that, unlike the Boomer generation, more women than ever had jobs outside the home, necessitating the need for two cars in many households.

However, it was the arrival of the millennials, or those born between 1981 and 1996, the generation whose entry into the workplace coincided with 2007–09, that sparked predictions about the end of car ownership and driving. The generation opted to share rather than own cars.

The rising costs of owning and maintaining a car, along with Millennials’ need for technology and on-demand services, increased their attraction for the new ride-hailing and ride-sharing choices.

Favouring public travel more and more

However, studies in the US currently show that Millennials do drive, albeit less frequently than past generations did, despite being more open to using alternative modes of transportation than earlier generations were.

In comparison to Generation X and Baby Boomers, Millennials drive 8% and 9% less, respectively, according to the journal Transportation Research.

It is significantly more difficult for digital marketers to predict the purchasing preferences of Generation Z, individuals who were born after 1996 and are the first generation to have grown up with the Internet and mobile phones. This generation is also regarded as the most important customer group.

These modern, technologically adept young people are what have carmakers worried. It appears that this generation prefers sustainable options like cycling and public transport over driving.

Although they are the most educated and varied generation in the EU, they are also the most vulnerable in the housing and employment markets.

The absence of intergenerational earning mobility has a particularly negative impact on Generation Z, making it the generation most at risk of poverty. In addition, after school and college closures and job losses, they have been severely afflicted by the COVID-19 pandemic. It is therefore likely that Gen Z will shun driving not just for concerns about health and the environment but also due to costs.

Generational change is not the primary driver of changes in everyday mobility, according to a recent German study on changes in daily bicycle and vehicle use between 2002 and 2017.

Fewer private car sales

Instead, the research suggests that whether individuals are more likely to use a car or a bicycle as a transport mode is determined by a number of varied factors, the most significant being where you live, education, income, and commuting distance.

According to The Future of Mobility, a new report from the global management consulting firm McKinsey, mobility is “on the verge of a major transformation” and one major outcome will be “fewer private-car sales”.

The use of cars is anticipated to fall dramatically, especially in many European and US cities, as more nations and cities adopt regulations to promote sustainability and reduce the use of private vehicles, from reduced parking spaces to limiting the number of private cars in cities.

Lower rates of car ownership among Generation Z are likely due to the growth of low-paying, less secure professions as well as a decline in home ownership, but change will not be driven by one age group.

The car is expected to maintain its dominant position over the next decade, but it will face increasing competition from alternative transportation modes, and it’s likely, in the future, more than just Gen Z will wonder if they really need to own a car.