An article at the CNN Money website observes that "young people just aren't buying cars like they used to."
It cites several reasons. The most obvious is the economy. If you're unemployed, or underemployed and barely squeakin' by, maybe the youngstas can't afford a $300 car payment. (Plus the many other expenses involved with owning a car - gas, insurance, maintenance, etc.)
It also suggests that owning a car and having a driver's license is no longer a "rite of passage" the way it was a generation or two ago.
I can attest to that from personal experience. When I was growing up here in Boise, you could get a daytime driver's license at 14... and as soon as I was old enough I took driver training and got my license. (In a twist of cruel irony, on the first day I had my license, I drove some buddies to the Fair, and we ended up staying too late. I got home after dark and lost driving privileges for a month. DOH!!) By comparison, none of my kids has shown much enthusiasm for getting a driver's license, and none of them drove before age 18. Even my son, who is now a "car enthusiast." (Erik's pride and joy is his '93 TransAm - although he also does a lot of bicycling and motorcycling.)
It also suggests that the virtual online society has largely replaced the youthful society of yesteryear - cruisin' Main Street and hangin' out at the drive-in restaurant.
Speaking of "car enthusiasts," it says 30% of Baby Boomers considered themselves "car enthusiasts," and less than 15% of Gen-Yers say the same, and they are buying practical cars rather than enthusiast-type cars.
Also pointed out is the "re-urbanization" of America, and the rise in prominence of public transportation, car rental options, etc.
I'd also say bicycles have become a more viable transportation option over the last 25 years, as many communities have improved bike facilities. Plus, when I was a teenager, a bicycle was the last-option mode of pathetic transport, used by those who didn't have a car or a friend with a car. (Even getting a ride from Mom was preferable to showing up on a bike!) Nowadays, by comparison, there's a certain "cool factor" to bicycling... the trendy hipsters ride around on single-speeds, making bicycling a somewhat fashionable alternative. "Image" always has been, and always will be, huge for young folks.