U.S. auto market faces long-term sales decline by 2040, Bain says

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U.S. auto sales decline by 2040

Highlights

Bain & Company projects the U.S. auto market could lose more than 2 million annual sales by 2040 due to demographics and affordability.
The share of new vehicle registrations from people aged 18–34 is set to fall below 10% by mid-2025, with buyers 55+ making up nearly half of registrations.
Vehicle age hits a record 12.8 years in 2025, while the deregistration rate is expected to drop to 4.4% by 2040, increasing competitive pressure and consolidations among automakers.

Demographics and affordability drive weaker demand outlook

As reported by CNBC, Bain & Company says slowing population growth, lower birth rates, high vehicle costs and broader transport alternatives are combining to reduce the long-term growth potential of the U.S. auto market.

The consulting firm says the industry has historically relied on about 1% annual growth linked to population gains, but that dynamic is weakening. Mark Gottfredson, a partner at Bain & Company, says the sector is moving from a growth industry to a declining one just as technology disruption intensifies.

Bain points to a U.S. fertility rate of about 1.6 births per woman in 2025, below the replacement rate of 2.1 cited by the Centers for Disease Control. The firm says immigration has partly offset that trend, but it expects restrictive immigration policies to persist for the next 15 years, cutting historical net migration rates of the past 20 years in half and potentially pushing levels back toward those seen in 2019.

Consumer behavior is also changing. Bain says about half of 16-year-olds today do not have a driver’s license, compared with nearly 70% of 16-year-olds between 1966 and 1984, although most still obtain licenses by age 25. S&P Global Mobility says the share of new vehicle registrations among people aged 18 to 34 falls from 12% in the first quarter of 2021 to under 10% by mid-2025, while buyers aged 55 and older account for nearly half of all new registrations for eight straight quarters.

Craig Daitch, founder and president of Telemetry, says affordability is the main force behind the shift. New vehicle monthly payments are up 30% over four years, and nearly one in five new vehicles now carries a payment above $1,000 a month.

Competitive pressure rises for automakers

Other forecasters also see a constrained market. AutoForecast Solutions expects U.S. new car sales to remain relatively flat at around 16 million through 2033, the furthest year for which it publishes estimates, while Bain says the market could lose more than 2 million annual sales by 2040.

Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, says younger consumers are more likely to use Uber or Lyft, even though some still want new cars. Bain adds that if robotaxis become widely available and affordable in the next 15 years, the share of the licensed population could fall by 2 to 3 percentage points to 85%, while vehicles per driver could decline from 1.2 to 1.1, implying that 10% to 20% of U.S. households could give up one vehicle.

Gottfredson says Bain revised its earlier projection that volumes would fall below 14 million by 2030 because autonomous vehicles are taking longer than expected to arrive. He says the demographic component is more certain because the future pool of driving-age consumers is already largely determined.

Bain also cites lower vehicle deregistration as a sign of slower market turnover. The rate was about 6% in 2000 and about 5% in 2025, and Gottfredson says it could fall to 4.4% by 2040 as vehicles stay on the road longer. S&P Global Mobility says vehicle age reaches a record 12.8 years in 2025.

That trend may not be permanent because electric vehicle battery life and the duration of software support remain uncertain. Still, forecasters say high prices mean the industry needs vehicles to remain usable for longer, increasing pressure on automakers in a market with about 450 nameplates and intensifying the likelihood of consolidation.

Our earlier coverage of Canada’s plan to allow Chinese-made electric vehicles into the country outlined how Geely’s Lotus brand is set to begin shipments under a new import framework. We noted that the agreement could open the door for other Chinese automakers such as BYD and Chery, while raising questions about pricing pressure, demand testing, and broader supply-chain and trade implications.

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