Owen Smith
2K Club - QQ Super Nova
Actually you've pretty much nailed the main problem in the first sentence. The main FM market isn't a bunch of geezers listening to their 70s boat anchor receivers in their homes but rather drivers on their daily commutes. In fact that demographic is so large it keeps the FM band profitable here in the states (unlike the majority of Europe where analog FM is dead).
Analogue FM is doing fine in the UK, there is as much broadcast on it as there ever was. Independent (as in not the BBC) radio has always struggled to be commercially viable in the UK, but it's no worse now that it has been for decades. And as in the US, a lot of that listening is in cars. I don't know if it is the majority, there are plenty of people in the UK listen to radio elsewhere. And newer cars have dual DAB/FM tuners, but unlike what you describe for the US there is no automatic switch from FM to DAB and the user knows when they're listening to it. The different reception issues give the game away for a start.