---- — TRAVERSE CITY, Mich. (AP) — The auto industry says people under 34 are gradually starting to buy cars again as their economic circumstances improve.
After the Great Recession, sales of cars to young people dropped significantly. Fewer of them even bothered to get drivers licenses.
People age 18 to 34 accounted for more than 14 percent of the U.S. new car market just five years ago, but that plunged to 10.5 percent in 2011, to according to registration data collected by the Polk auto research firm. The figure grew to 12.3 percent last year.
Licensing rates led some industry analysts to conclude that young people have less need to travel and aren’t interested in buying cars. In 1984, nearly 80 percent of people ages 16-24 had driver’s licenses, but that fell to only 68 percent in 2010. In the next-oldest demographic group, 25- to 34-year-olds, 95 percent had licenses in 1984, but that dropped to 88 percent in 2010.
But industry executives now have a different take.
“I don’t see any evidence that young people are actually losing interest in cars,” said Mustafa Mohatarem, General Motors’ chief economist, at the Center for Automotive Research Management Briefing Seminars recently.
Mohatarem and others at the conference said young people put off getting licenses because they’ve had trouble getting jobs and have been living with their parents. They also didn’t buy cars due to rising car prices and higher costs to own cars, such as insurance and gasoline.
In May, the unemployment rate for 16 to 19-year-olds was 24.5 percent, more than three times the national rate. It was 13.2 percent for people 20-24, according to GM. Without jobs, it’s difficult for younger people to buy cars, the analysts said. In addition, Federal Reserve data show that people age 18 to 34 lost 44 percent of their net worth between 2001 and 2010, yet their aggregate student loan balances have nearly doubled to a total of $1 trillion, the analysts said.
“The younger buyer is broke,” said Anthony Pratt, vice president of Americas forecasting for Polk. “This demographic has been the hardest hit, from unemployment, from net worth, from income — all factors that would influence demand for high-priced consumer goods like an automobile.”