Is Gen Z Driving Less?

Why Is Gen Z Driving Less?

Getting a driver's license used to be a crucial American rite of passage. It was a sign of independence – a ticket to freedom and the open road. But these days it appears teens and young adults are waiting longer to get their licenses and also driving less. 

There are a number of theories as to why:

They don’t need to leave their homes

Gen Z is the first generation growing up in a truly digital world. They don’t need to leave their homes to get food, buy clothes, play video games, or chat with friends. Between 2009 and 2017, the median weekly trips taken by teenagers dipped by 16%.^[2] Of course, that was before a global pandemic that pushed people to stay in and increased digital convenience even more. 

They’re seeking alternative options

Previously, suburban teens needed a car to do most things if they didn’t live in an urban environment with good public transport (which is a rarity in the U.S.). However, with the advent and increasing spread of Uber, Lyft and other rideshare options, a personal vehicle isn’t as necessary to get around. Gen Z is also flocking to urban areas that do have public transportation. Major metropolitan areas, including New York City, Los Angeles, and Chicago, are seeing population losses for every generation except Gen Z.^[3]

They’re concerned with the environmental impact

Driving less could also be a choice based on environmental concerns. Gen Z is particularly likely to be anxious about addressing climate change (which makes sense given that they and Gen Alpha after them are most likely going to be dealing with the consequences of decisions made today).^[4] Transportation is the single largest source of CO2 emissions in the United States. According to research by the Washington Post, if the roughly 66 million members of Gen Z all drove 10 percent less than the national average, it would save about 25.6 million metric tons of carbon dioxide emissions each year.^[5]

They can’t afford it

Another concern is the actual cost. The average cost of new cars is now well over $48,000—up almost $6,000 from two years ago.^[6] Car insurance is also up nearly 19% this year alone. Of course, teens and young adults are paying the greatest amount for car insurance. General living expenses have also gone up. These combine to make owning a personal vehicle out of reach for some younger drivers.

How Car Insurance Is Adapting

Gen Z is one-fifth of the total U.S. population.^[7] While Gen Z might not be driving as much as other generations, they still represent a huge market of new drivers for insurance companies. Here are some ways the industry is changing to adapt to the needs of younger drivers.

They’re streamlining processes 

Digital-native youth don’t want a lot of paperwork and a long underwriting process. (Frankly, no one does.) Insurance companies are increasingly investing in mobile apps to improve customer experience and appeal to those used to being able to do everything on their phones. Apps enable self-service, 24/7 chatbots and quick claims processing. 

They’re adapting products

Insurance companies are becoming more tech-driven and tailoring policies to the needs of Gen Z. This includes things like telematics and usage-based insurance, which allows those who drive well, or just drive less, to be rewarded with less expensive policies.

They’re marketing differently

Insurance companies are increasingly embracing social media and influencer marketing to reach younger audiences. While a few years ago, it would have been rare to see an insurance company on TikTok; now it’s rarer not to. 

They’re focusing on sustainability 

To address the environmental concerns of Gen Z, many insurance companies are offering special incentives for eco-friendly vehicles or driving habits. This can include hybrid vehicle premium discounts, endorsements that allow hybrid or EV replacement and alternative fuel premium discounts.