US Car Market Is Expected to Shrink

America's days of easily churning out 17 million-plus new car sales a year may be in the rearview mirror, CNBC reports. A new Bain & Company analysis flags a bundle of forces—fewer births, tighter immigration, high prices, and rising alternatives to ownership—that could push annual US sales down by more than 2 million vehicles by 2040. "It starts with the population declines," says Bain partner Mark Gottfredson, who describes a tech-disrupted market fighting over a shrinking buyer pool. "You're no longer a growth industry. You're a declining industry. You're a declining industry at a time when the technology is disrupting everything."

Demographics are only part of the squeeze. Fewer teens are rushing to get licenses, and people ages 55+ now make up nearly half of new vehicle registrations, per S&P Global Mobility. Affordability is a major brake: monthly payments are up about 30% in four years, with nearly 1 in 5 new cars topping $1,000 a month. Meanwhile, ride-hailing and potential robotaxis threaten to trim both the share of licensed drivers and cars per driver. Vehicles are also sticking around longer—averaging 12.8 years on the road—further dampening replacement demand. With roughly 450 models already vying for buyers, Gottfredson predicts "ferocious" competition and eventual consolidation as automakers battle for a smaller, older, and more cost-conscious market.