A 'perfect storm' points to a much smaller U.S. auto market by 2040
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- Bain & Company projects U.S. auto sales could fall by more than 2 million units by 2040, down from a record 17.6 million vehicles sold a decade ago, with partner Mark Gottfredson calling the demographic, technology, and affordability convergence a 'perfect storm.'
- The U.S. fertility rate sits at 1.6 births per woman, below the 2.1 replacement rate per the CDC, and Bain expects restrictive immigration policies to halve net migration over the next 15 years.
- Half of today's 16-year-olds lack a driver's license, versus nearly 70% historically between 1966 and 1984, while new vehicle registrations among 18-34 year-olds fell from 12% in Q1 2021 to under 10% by mid-2025, according to S&P Global Mobility.
- Telemetry founder Craig Daitch said new vehicle monthly payments are up 30% over four years, with nearly one in five new vehicles now carrying payments over $1,000 a month.
- Vehicle longevity hit a record 12.8 years on the road in 2025, and Bain expects the deregistration rate to drop from 5% to 4.4% by 2040, meaning fewer scrapped cars get replaced.
- With roughly 450 nameplates already competing for U.S. buyers, Gottfredson said competition will be 'ferocious' and the market 'is going to have to consolidate.'
Why it matters: The auto industry has built its business model on roughly 1% annual growth tied to population growth, per Bain; that engine is stalling at the same time 450 nameplates chase a shrinking buyer pool, forcing industry consolidation and squeezing automakers and dealers already grappling with record monthly payments and aging vehicles that stay on the road longer.
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