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When it comes to younger generations, are cars going the way of the dinosaur? Not quite — but there are some very interesting trends in driving/car purchases, technology use, city living and the correlation between them all.

Let’s start this story by traveling back to the days of the carhop and the drive-in movie theater, when young people’s social worlds were tethered to their automobiles. Learning to drive and getting your first car was one of the most important rites of passage.

Plus, with the Internet and mobile phones still decades away, a quick car ride was the most logical way to stay in touch with friends and family. As such, an important part of teenage and young-adult life, it’s no wonder previous generations took such great pride in their cars — and still maintain anappreciation for automotive craftsmanship.

Today, technology has taken over, causing a paradigm shift in industries from music to publishing — and everywhere in between. The automotive industry is not immune, and although the tech link may not be as clear-cut, it’s undeniable.

Shift to Tech

In 1978, nearly half of American 16-year-olds and three-quarters of 17-year-olds had their driver’s licenses, according to data from the Department of Transportation. In 2008, the percentages were 31 percent and 49 percent, respectively.

Of course, harsher driver’s license restrictions are a contributing factor, but the decline in the number of drivers continues among those well into their 20s.

To industry experts and technology analysts, it comes as no surprise that this decline accelerated starting in 1998 — about the same time AOL chat rooms, email and mobile phones began to make their mark.

With massive strides in technology over the last decade, young people now worship their iPads, laptops and every other sleekly designed, Web-connected device

In fact, an international University of Michigan study found that in countries where Internet usage is high amongst young people, fewer have driver’s licenses. The reason? A notable number of 18- to 24-year-olds said socializing online is a substitute for some car trips.

Social networking isn’t the only online phenomenon making the car obsolete to some younger people: The explosion in online commerce has decreased the need to take a car trip to the mall.

Other Factors

While the number of U.S. miles driven has recovered with the economy, fuel prices, insurance cost and unemployment among younger generations have all put a damper on owning a car—and certainly on buying new. In fact, the share of new cars bought by 18- to 34-year-olds dropped from 16 percent in 2007 to 12 percent in 2012. Some of those buyers switched to used cars — but others aren’t buying at all.

On the contrary, public transportation among 16- to 34-year olds with incomes higher than $70,000 has doubled, thanks to booming urban populations. Today, more young people are living in cities where a car is obsolete (an often undesirable) thanks to high parking costs, traffic and highly efficient public transportation systems.

Suburban commuters are forgoing their cars for these reasons — and to make the most of their workday. After all, they can connect wirelessly and get an extra two to three hours of work done on the train.

Car sharing is another emerging trend. Zipcar — the world’s largest car-sharing service — owns various parking spots throughout cities and suburbs where users can pick up and drop off cars at their leisure. Members of this “club” reserve cars online, unlock them with special cards and use the keys already inside to get going.

Members pay an annual fee to take advantage of the service, as well as hourly/daily to use a Zipcar. Members must have had a valid driver’s license for at least a year, and need to be at least 21 (or 18 if affiliated with a university).

A Northeastern University study shows that there may be more to Zipcar’s popularity than just convenience.

Respondents said they liked that Zipcar let them try out different cars—and, by extension, different lifestyles and identities. By contrast, owning a car made them feel “tied down,” as if they were in a marriage.

Connecting the Dots

What do these changes mean for dealerships? How can they more effectively sell to these younger, automotive-apathetic consumers? The answers lie in understanding the new car-shopping journey — and the “digital decisions” that surround it.

In the next several parts of this blog series, we’ll learn why the traditional buying funnel is dead, and the new way to succeed when selling to Gen X and Gen Y. We’ll share our cutting-edge research on how younger consumers make their vehicle purchasing decisions—and provide the keys to a developing a successful online strategy for them. Stay tuned for Part II.

Patrick McMullen is vice president of sales at MAX Systems. This blog entry and others can be found at www.getrelevantordie.com.

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