Bain Analysts Say U.S. Auto Market Could Shrink More Than 2 Million Units By 2040

Ten years ago, a record 17.6 million cars, trucks and SUVs were sold in the U.S., but Bain & Company analysts told CNBC that several signs indicate the market is about to shrink even more by 2040.

“The race toward global electrification is no longer advancing in a straight line”

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Mark Gottfredson, a partner at Bain & Company, said, "It is the perfect storm, isn't it," and tied the outlook to "population declines" that leave the industry "a declining industry."

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Bain’s analysis links the forecast to falling birth rates, behavioral changes, high car prices and a growing array of alternatives that could drive sales down by more than 2 million units by 2040.

The CNBC report also cites that the U.S. fertility rate in 2025 was about 1.6 births per woman, considered below the replacement rate of 2.1, according to the Centers for Disease Control.

Bain said restrictive immigration policies are expected to last for the next 15 years, cutting historical net migration rates of the past 20 years in half, which could again reach low levels seen in 2019.

Craig Daitch, founder and president of Telemetry, told CNBC, "The engine behind it is affordability," as new vehicle monthly payments are up 30% over four years.

Daitch added that nearly one in five new vehicles now carries a payment over $1,000 a month, while Bain research cited by CNBC shows half of 16-year-olds today don’t have a driver’s license.

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Bain’s research suggests most people still get licenses by age 25, but 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.

Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, said, "When you look into the future, younger people are more likely to use Uber or Lyft when they're going somewhere."

Fiorani added that the company is still seeing groups of young people who enjoy driving and want a new car, but fewer can afford it, even as AutoForecast Solutions expects U.S. new car sales to stay relatively flat at around 16 million through 2033.

Bain research cited by CNBC projects that 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%.

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The same CNBC report says 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, as automakers compete for a shrinking number of customers.

Gottfredson told CNBC that the decline is even worse in places like Europe and in most of the countries in Asia, while he said the projections he shared are revisions from an earlier 2030 target.

In a separate business analysis, the Council of the European Union validated the free trade agreement with Mercosur on Friday, January 9, and the interim trade agreement would come into force if the European Parliament approves by a simple majority and the Council by a qualified majority.

The EU-Mercosur agreement aims to eliminate tariffs by 91% in Argentina, Brazil, Paraguay and Uruguay on European products and by 92% in Europe on South American products, while a Brussels-commissioned study projected European GDP would rise by €77.6 billion (0.05%) by 2040.