[Population Decline Impacting Industries] American Youth Not Getting Licenses, European Youth Comparing Prices

In advanced countries such as the United States and Europe, the interest and capacity of the younger generation to purchase cars are declining. This is because, after the COVID-19 pandemic, the purchasing power of the younger generation has decreased, and their perception of car ownership has changed compared to before.

According to data from the U.S. Department of Transportation on the 9th, the percentage of 18-year-olds obtaining driver's licenses in the U.S. was 77%, 67%, and 58% in 1988, 2004, and 2020, respectively. Over time, more young people think that "there is no need to get a driver's license."

General Motors (GM) employees in the United States are preparing Chevrolet Camaro vehicles for customer delivery.
[Photo by Yonhap News, Reuters]

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During this period, each generation is called Generation X (born 1965?1980), Millennials (born 1981?1996), and Generation Z (born 1997?2006). Experts analyzed that the biggest reason for the decline in the driver's license acquisition rate among the representative young generations of each era is the decrease in spending capacity.

According to data from the U.S. Bureau of Labor Statistics, as of 2020, Generation Z in the U.S. spent $7,300 on transportation costs, which is 20% of their average annual salary ($37,300). This figure is more than 30% lower than in 2019, before the COVID-19 pandemic. Unlike Korea, where public transportation is relatively well-developed, the decrease in transportation expenses in the U.S. can be interpreted as a decline in car purchasing power.

Vehicle-hailing platforms Uber and Lyft gathering point in San Diego, USA
Photo by Yonhap News, Reuters

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Changes in perception regarding the use of private passenger cars also contributed to the decrease in car purchases among the younger generation. In Europe, where practical consumption is preferred, the proportion of people choosing leasing instead of purchasing cars is gradually increasing.

According to a survey conducted by consulting firm McKinsey & Company targeting 4,000 consumers in Europe (France, Germany, and the United Kingdom), 15% of Generation Z respondents said they would choose leasing as their next mode of transportation. Additionally, one in two European Generation Z respondents said they would buy an electric vehicle, and 64% preferred compact cars. More than half of the Generation Z respondents answered that the most important factor in purchasing a car was "price."

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