U.S. Auto Market Faces Decline as Demographics, Prices and New Mobility Options Shift Demand

Bain & Company projects U.S. vehicle sales could fall by over 2 million units by 2040, reversing the 1 % annual growth that matched population gains. The 2016 peak of 17.6 million vehicles is unlikely to be reached again. Fertility dropped to about 1.6 births per woman in 2025, below replacement, and net immigration—historically ~1 million per year—is expected to halve for the next 15 years, shrinking the future driver pool.

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

Registrations by 18- to 34-year-olds fell from 12 % in Q1 2021 to under 10 % by mid-2025, while buyers 55 and older now hold nearly half of new registrations. Monthly payments rose 30 % over four years; one in five exceeds $1,000. Average vehicle age hit a record 12.8 years in 2025, and deregistration fell from 6 % in 2000 to 5 % in 2025, projected 4.4 % by 2040. Half of today’s 16-year-olds lack a license, versus 70 % in the 1966-84 cohort. Bain warns robotaxis could cut vehicles-per-driver from 1.2 to 1.1, prompting 10-20 % of households to drop one car.

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

Bain calls the mix of slower demographics, higher prices and technology disruption a “perfect storm” that will sharpen competition for a shrinking base and spur consolidation. Telemetry’s Craig Daitch says affordability is the main driver. AutoForecast Solutions expects sales to stay flat around 16 million through 2033, noting younger buyers favor ride-hailing services like Uber and Lyft. The firm’s flat-sales view contrasts with Bain’s >2 million-unit decline forecast, highlighting uncertainty over timing. Analysts also flag unknowns about electric-vehicle battery life and software support; Sam Fiorani warns modern cars cannot be built for a five-to-ten-year lifespan without becoming impractical for owners spending $50,000-$100,000.

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The shrinking market could trigger mergers among the roughly 450 nameplates in the U.S., push manufacturers toward longer vehicle lifecycles, and force innovation around affordability and mobility-as-a-service. Bain expects consolidation, while autonomous mobility services may further depress ownership. Stakeholders will monitor immigration policy and robotaxi rollouts to gauge the pace of change.

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• “It is the perfect storm, isn't it,” — Mark Gottfredson, partner, Bain & Company

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• “The engine behind it is affordability,” — Craig Daitch, founder and president, Telemetry

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• “When you look into the future, younger people are more likely to use Uber or Lyft when they’re going somewhere,” — Sam Fiorani, vice president of global vehicle forecasting, AutoForecast Solutions

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

• “The competition in the U.S. is going to be ferocious,” — Mark Gottfredson, partner, Bain & Company

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