A ‘Perfect Storm’ Points to a Much Smaller U.S. Auto Market by 2040

New analysis from Bain & Company suggests the U.S. auto market could shrink by more than 2 million vehicle sales by 2040, driven by slowing population growth, lower birth rates, affordability challenges and changing transportation habits among younger consumers. The article notes that buyers age 55 and older now account for nearly half of all new vehicle registrations, while registrations among adults ages 18 to 34 have declined. Rising vehicle prices and monthly payments—nearly one in five new vehicle loans now exceed $1,000 per month—are also prompting consumers to keep vehicles longer, with the average vehicle age reaching a record 12.8 years.

These long-term trends signal a fundamental shift in the automotive marketplace, creating opportunities for dealers, aftermarket service providers, repair shops, tire retailers, insurance companies and financial institutions that can help consumers maintain vehicles longer, manage ownership costs and adapt to an increasingly value-conscious market.