A 'perfect storm' points to a much smaller U.S. auto market by 2040

Key Points:

• U.S. vehicle sales, which peaked at 17.6 million units a decade ago, are projected to decline by over 2 million by 2040 due to falling birth rates, behavioral shifts, high prices, and alternative transportation options, according to Bain & Company.
• Population growth slowdown, driven by below-replacement fertility rates and expected restrictive immigration policies, is reducing the pool of potential car buyers, with younger generations showing less interest in driving and vehicle ownership.
• Affordability challenges are significant, with new car payments rising 30% over four years and nearly 20% of new vehicles costing over $1,000 monthly, contributing to reduced new vehicle registrations among younger buyers.
• The rise of ride-sharing, potential widespread adoption of autonomous vehicles, and longer vehicle lifespans (now averaging 12.8 years) may further decrease vehicle ownership rates, intensifying competition among automakers.
• The U.S. auto market faces consolidation as over 450 brands compete for a shrinking customer base, with industry experts warning of a future marked by fierce competition and structural changes.