I think that a big piece of the puzzle is that driving itself isn't that much fun anymore. What does it matter if you're driving a Z06 with 505 hp if you're in a morass of cars in front, in back, and on both sides of you? Is a stick shift any fun when you're stuck in traffic, the clutch is starting to melt, and your knee is shaking?
I'm lucky enough to live in a rural area where there's still a few places that I can have a "lonely" drive with the road all to myself, but as we necessarily become a more urban society due to over population, most of the driving that people do by necessity, as opposed to some purely recreational jaunt, is not very pleasant. Not only are we "not in Kansas anymore", we're not in the 60s anymore. It's not hard to understand that kids who have grown up in today's circumstances don't have any real fondness for cars and driving. What's to be fond of?
I think that the view that a car is a "transportation appliance" is the prevailing view, for completely understandable reasons, and is unlikely to change going forward. I cling to my old stuff and old ways almost entirely for sentimental reasons, but even I spend nearly all my miles driving a truck that's about as exciting as oatmeal, but reliable and comfortable beyond anything that was available in the 60s. I think that "car people" will always have toys, even if those toys are actually motorcycles, but I also think that the age of the "transportation appliance" is here, and most people will be about as fond of their car as they are of their refrigerator.