Americans scrapped more automobiles than they bought last year as the ragged economy reduced demand and some major cities expanded mass transit service, according to a new report.

The United States scrapped 14 million autos while buying only 10 million last year, shrinking the country's car and light duty truck fleet to 246 million from a record high of 250 million, according to the report to be released on Wednesday by nonprofit group the Earth Policy Institute (EPI).

The United States, the world's biggest petroleum user, is entering a new era, evolving from a car-dominated transport system to one that is much more diversified, said Lester Brown, the president of the EPI.

While many cities like New York have had to cut mass transit services and raise fares during the recession, Phoenix, Seattle, Houston, Nashville and other cities have expanded or improved mass transit systems.

Cities are taking a variety of steps, like adding rapid bus lanes and light duty rail, to fight traffic congestion and air pollution. Some are raising parking meter prices and cutting down the required parking spaces per building, the report said.

President Barack Obama's cash for clunkers program, which last summer gave consumers a rebate of up to $4,500 for trading in older cars and light trucks, led to the scrapping of more than 700,000 vehicles. But since the incentive was only available to consumers who bought new fuel-sipping vehicles, it did not affect the ratio of scrapped vehicles to new sales.

Market saturation of autos, urbanization, high oil prices that reached a record $147 a barrel in 2008, and the uncertain economy have helped cut car sales, Brown said. Given those forces, sales may never reach the 17 million per year level they were between 1999 and 2007, he said.

Because more people live in cities than a few decades ago, young people, particularly those burdened with student loans, are foregoing car purchases, the report said.

As more people live in cities, some teens are not even bothering to get diver's licenses. The number of teenagers with licenses peaked at 12 million in 1978 but is now under 10 million, the report said.

When I was a kid socializing revolved around getting into a car and going for a drive, said Brown. Today kids socialize over the Internet and on smart phones.

A continued drop in auto purchases could cut long-term oil demand and greenhouse gas emissions from transportation. he said. It could also lead to increases in steel supplies as big cars get recycled, Brown said.

Brown used data from the U.S. Federal Highway Administration and R.L. Polk & Co to write the report.

(Editing by Philip Barbara)