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Owning a car was once a rite of passage for American youth, but times are changing, and this big-ticket purchase is becoming less relevant to people under 30. 

New studies are showing that many people in Generation Y no longer have the ambition to purchase cars or drive in general. According to an independent study conducted by ZipCar, Inc., the world’s largest car sharing service, nearly half of all 18 to 34-year-old drivers are driving less and owning fewer cars. Almost two-thirds surveyed said they would drive less if alternative transportation, such as public transportation, carpooling, or car sharing, was available. 

Although only 1,000 people were surveyed, the auto industry should take note that a new breed of drivers are hitting the road. 

Survey respondents cited the high cost of owning and maintaining a car, not to mention insurance and gas as why they are steering clear of  becoming car owners. 

“Insurance rates have been as high as they’ve ever been and they’re higher for youth,” says Karl Brauer, senior analyst at “It’s very expensive to own a car when you’re young and you’re going to be more conscious [considering] the economic times.”

Experts also pointed to the hassle of owning a car, especially those living in big cities, as a reason young adults are snubbing owning cars.

“There’s a few concerns that people have in planning for the car business and transportation overall for the next few years,” says Jon LeSage, automotive editor of green initiatives at Automotive Digest. “One of them certainly is the gridlock; in  lot of cities, the traffic congestion is really getting bad.”

Social media is also making it easier for people needing a ride to find one.

Rental Car Industry Kill the Auto Sector?

Carpooling and car sharing have become popular and a more economic option for consumers who only need a car once in awhile, especially in larger cities.

Companies provide car sharing services by renting cars for short periods of time to people who only occasionally need to drive. You can rent overnight, for daily use, or even by the hour.

LeSage explains that some auto companies, such as Ford and General Motors (NYSE:GM), are jumping on this trend and offering car sharing services of their own.

“[Companies]have got to accept the fact that there’s going to be things like car sharing,” he says. “They are going to become more important for people.”

While car sharing might be fitting for cities dwellers, young adults living in more rural areas might have a harder timing getting around without owning a car.

“Those people are not going to have the same options,” says Brauer. “What they do [decide] is whether [to] buy a car or use social media and not be there physically.”

Car Sector Could Lose Life-Time Customers

“Millennials” comprise a huge component of potential car buyers. According to a study by Deloitte LLC, Gen Y is the largest generation since the “Baby Boomers” with 75 million people either eligible to drive or coming of age to drive. If the amount of young car buyers decreases drastically, it could have a big impact on profitability for the car industry.

“It would definitely have some long term-negative effects nationally,” says Oren Weintraub, president of Authority Auto. “Manufacturers [would be] selling less cars, dealers making less revenue, states getting [fewer] taxes because of fewer sales, manufacturer and part suppliers having to cut back because they’re not needed as much—it can have a ripple effect to other areas of the economy.”

Weintraub also said a decrease in drivers hitting the road could cause automotive brands to lose out on a valuable market segment and promotional opportunities. Not to mention a brand’s consumer loyalty may take a hit due to a decrease in advertising and exposure.

“Part of that generation getting into cars develops an opportunity for these car manufacturers to brand with their clients,” he says.

What it Could Mean for Gen Y

While not buying a car can save you significant money and cut out immediate costs, Weintraub cautions that young adults should look at the big picture

 “Someone getting into their first car loan is an important part of establishing credit as a young person to set themselves up for when it comes time to buying their first house or getting a more expensive car,” says Weintraub. “At that time when these lenders are looking at your credit history, having a perfectly-paid car loan will help qualify anyone for larger purchases and not only qualify you, but qualify you at the lowest possible rate that’s available.”

What's Next 

While it’s tough to predict what’s next for the auto industry one thing is clear--it better keep up with the times and adapt to new drivers’ habits and lifestyles. 

“I think the challenge for all of these car companies is to connect with consumers in spite of these circumstances,” says Brauer. “The user is more interested in the latest phone rather than the latest car.”

LeSage explains that a shift in accessibility to the Gen Y market will be among the many challenges car companies face in adapting the way they do business.

“They’re becoming a lot more scaled down in terms of what they’re doing; they have to be very efficient in the process in their manufacturing,” he says. “They’ve made some tough decisions; there are less people that work for them now, they’re still adapting organizationally.”