For decades, the U.S. auto industry enjoyed consistent population growth and increased demand for cars. However, analysts say changing demographics, affordability issues, and consumer habits could change the face of the market. As it turns out, the market for cars sold in the U.S. is set to become more competitive by 2040, according to consulting firm Bain & Company, which is predicting the market will shrink by over 2 million vehicles.
Expect Fewer Cars to Be Sold by 2040
Bain & Company estimates U.S. sales of vehicles could drop by over 2 million per year by 2040. The firm believes that slowing population growth, shifting transportation patterns, and affordability issues will create an environment that will make new vehicle demand more difficult to sustain.
Population Growth Is Slowing
The automobile industry has always been dependent on the population to drive car sales. But many countries, such as the U.S., are seeing growth rates that are not as robust as they have been in the past – which would impact the number of future drivers and car buyers in the market.
The U.S. Birth Rate Is Below Replacement Level
The Centers for Disease Control and Prevention report that the U.S. fertility rate in 2025 was about 1.6 births per woman, which is below the replacement level of 2.1. As births diminish over time, fewer people may be able to afford a car.
Immigration Could Also Influence Future Demand
Bain thinks that net migration will decline as immigration numbers dwindle over the next 15 years. Lower immigration also would further dampen growth in the nation’s driving-age population, which has historically contributed to the country’s population growth.
Fewer Teenagers Are Getting Driver’s Licenses
Half of today’s 16-year-olds do not have a driver’s license, according to Bain’s research. Although a large number of them eventually get a license by the age of 25, it is a delay which indicates that younger people are taking a new approach to transportation than are older people.
Smaller Share of New Vehicle Sales
S&P Global Mobility predicts that between 12% and 10% of new car registrations will come from 18-to-34-year-olds by mid-2025. In the meantime, people aged 55 and older make up virtually half of all new registrations.
Robotaxis Could Reduce Vehicle Ownership
The spread of Uber, Lyft, and possibly robotaxis could spur some households to reduce their car ownership, analysts say. Bain projects a 10% drop in vehicles per driver between 2015 and 2040, dropping from 1.2 to 1.1.
Vehicles Are Staying on the Road Longer
Americans are driving their cars much longer. The average age of vehicles is now a record 12.8 years, according to S&P Global Mobility. Extended vehicle life is likely to lower new-car demand and result in less growth.
