Is This the End of Cars as We Know It?

Before you go, we thought you'd like these...
Before you go close icon

Premium Rush opens soon at a multiplex near you.

The action thriller -- with its "Ride Like Hell" tag line -- follows a bike messenger around Manhattan being pursued by seedy types.

A bike messenger? Really?


We haven't entirely lost our appetite for cars. The Fast and the Furious 6 is still slated to hit theaters next year. However, younger viewers seem to be less interested in fancy rides these days -- and it's not just a timely cinematic debut that's nudging me to that conclusion.

A Bloomberg article earlier this month had plenty of tantalizing data points.

  • According to R.L. Polk & Co., just 11% of this country's auto sales in April were to buyers between the ages of 18 and 34. Six years ago that group made up 17% of the industry's sales.
  • The University of Michigan Transportation Research Institute concludes that just 81% of 20-to-24-year-olds had driver's licenses in 2010, down from 92% in 1983.
  • Deloitte studied U.S. consumers born from 1981 to 2001 to find that smartphones are more desirable than cars.

That last point is important. The unsure economy isn't helping, but cash-strapped Millennials are prioritizing their expenditures and costly wireless data plans are winning out over car loan payments and auto insurance.

This is unwelcome news for automakers, and it could even potentially be a sticking point for Sirius XM Radio (NAS: SIRI) . Analysts see Ford (NYS: F) and General Motors (NYS: GM) posting declining profitability on flat sales growth this year. Satellite radio is holding up considerably better, as Sirius XM has been tacking on net new subscribers for a dozen consecutive quarters.

Harley-Davidson (NYS: HOG) , on the other hand, is expected to post improving profitability on a 6% uptick in sales this year.

However, the smarter trend would be to bank on the country's youth flocking to metropolitan cities with improving mass transit systems to get around. Car-sharing services will also continue to benefit.

Despite its stock taking a beating since going public last year, Zipcar (NAS: ZIP) continues to grow. Membership has climbed 21% over the past year, as thrifty drivers escape the high costs of auto ownership by renting vehicles -- with gas and insurance included -- by the hour.

This could all be an economic hiccup. It's the country's youth that's saddled with steep student loans and fighting to land low-paying jobs. How can they be expected to get around in even secondhand rides? When prosperity returns, maybe they'll stop cheering on bike messengers and swearing off gas guzzlers.

However, for now this has all the makings of a legitimate shift in consumer value perceptions and the prioritization of gadgets over cars as icons of freedom.

Shifting into gear
I recently put out a premium report on Sirius XM Radio, detailing the challenges and opportunities that await investors who are either long or short the dynamic media giant. A year of updates is also included with the report. Check it out now.

The article Is This the End of Cars as We Know It? originally appeared on Fool.com.

The Motley Fool owns shares of Ford Motor and Zipcar.Motley Fool newsletter serviceshave recommended buying shares of Zipcar, General Motors, and Ford Motor.Motley Fool newsletter serviceshave recommended creating a synthetic long position in Ford Motor. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Zipcar and Ford. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners