Bain & Company Forecasts U.S. Auto Sales to Drop 2M Units by 2040

Bain & Company analysts forecast the U.S. auto market could shrink by more than 2 million units by 2040, marking a significant departure from the industry's historical 1% annual growth rate. The consulting firm attributes the projected decline to falling birth rates, changing consumer behavior, elevated vehicle prices, and expanding transportation alternatives. The U.S. fertility rate stood at approximately 1.6 births per woman in 2025, below the 2.1 replacement rate, according to the Centers for Disease Control, while Bain expects restrictive immigration policies to cut historical net migration rates in half over the next 15 years. Mark Gottfredson, a partner at Bain & Company, characterized the situation as a "perfect storm" where population decline coincides with technological disruption across the automotive sector.

Falling Birth Rates and Immigration Trends Drive Population Decline

The auto industry has historically depended on an annual 1% growth rate tracking overall population increases, according to Gottfredson. Government statistics worldwide show population growth has slowed, with some countries already experiencing declines. The U.S. fertility rate of 1.6 births per woman in 2025 falls below the replacement rate of 2.1, according to the Centers for Disease Control. Bain stated this demographic shortfall has been offset by relatively high immigration — approximately one million people coming to the U.S. according to the historical average the firm cited. The consulting firm expects restrictive immigration policies to persist for the next 15 years, cutting historical net migration rates of the past 20 years in half, potentially reaching low levels seen in 2019.

Younger Buyers Delay Vehicle Purchases Amid Affordability Crisis

Half of 16-year-olds today don't have a driver's license, compared with nearly 70% of 16-year-olds between the years of 1966 and 1984, Gottfredson stated. Bain's research suggests most people still obtain licenses by age 25. The share of new vehicle registrations among people aged 18 to 34 fell from 12% in the first quarter of 2021 to under 10% by mid-2025, according to S&P Global Mobility. Buyers 55 and older account for nearly half of all new registrations and have held the largest share for eight straight quarters, the firm reported.

Craig Daitch, founder and president of Telemetry, a market research firm for the auto industry, identified affordability as the primary driver. New vehicle monthly payments are up 30% over four years, and nearly one in five new vehicles now carries a payment over $1,000 a month, he stated.

AutoForecast Solutions Projects Flat Sales Through 2033

AutoForecast Solutions expects U.S. new car sales to stay relatively flat at around 16 million through 2033, the furthest year for which the company issues estimates. Sam Fiorani, vice president of global vehicle forecasting for the company, noted that younger people are more likely to use Uber or Lyft when traveling. "We're still seeing groups of young people who enjoy driving and want a new car, but fewer can afford it," Fiorani stated.

If robotaxis become widely available and affordable in the next 15 years, the share of the licensed population could drop around 2 to 3 percentage points to 85%, according to Bain research. The number of vehicles per driver could drop from 1.2 to 1.1, equivalent to 10% to 20% of U.S. households shedding one vehicle. Gottfredson revised earlier projections that targeted 2030 for volumes dipping below 14 million, stating he changed those assumptions because autonomous vehicles are taking longer than expected to arrive.

Vehicle Deregistration Rates Signal Long-Term Market Contraction

Gottfredson identified the rate at which vehicles are "deregistered" — when they're taken off the road and either scrapped or exported — as the most direct indicator of potential future decline. In 2000, the deregistration rate was about 6%, according to the Bain report. As of 2025, the rate was about 5%. Gottfredson stated that rate could fall to 4.4% by 2040, primarily because vehicles are lasting longer — hitting a record 12.8 years on the road in 2025, according to S&P Global Mobility.

Fiorani noted the longevity of electric vehicle batteries remains uncertain, as does the duration automakers will be willing or able to update increasingly vital software in new cars. "Today's vehicles can't have a limitation of five to 10 years," Fiorani stated. "It's not practical for a person who's spending $50,000 or $100,000 that it's going to be junk in less than a decade."

Industry Consolidation Expected as Competition Intensifies

Consumers currently have their choice of about 450 nameplates in the U.S., according to the source. "The competition in the U.S. is going to be ferocious," Gottfredson stated. "There's too many automakers and too many brands competing for the consumers. The market is going to have to consolidate."

FAQ

What did Bain & Company forecast for U.S. auto sales by 2040? Bain & Company analysts forecast the U.S. auto market could shrink by more than 2 million units by 2040, driven by falling birth rates, changing consumer behavior, elevated vehicle prices, and expanding transportation alternatives.

Why are younger buyers purchasing fewer new vehicles? The share of new vehicle registrations among people aged 18 to 34 fell from 12% in the first quarter of 2021 to under 10% by mid-2025, according to S&P Global Mobility. Craig Daitch of Telemetry identified affordability as the primary driver, with new vehicle monthly payments up 30% over four years and nearly one in five new vehicles carrying a payment over $1,000 a month.

How long are vehicles staying on the road in 2025? Vehicles hit a record 12.8 years on the road in 2025, according to S&P Global Mobility. The vehicle deregistration rate stood at about 5% in 2025, down from 6% in 2000, with Bain & Company projecting it could fall to 4.4% by 2040.