Explained: Why America’s car market is shrinking

A Bain & Company analysis warns the US auto market could lose more than 2,000,000 units by 2040 as falling birth rates, soaring vehicle prices, changing consumer habits and robotaxis reshape the future of car ownership.

By CNBCTV18.com
June 28, 2026, 8:55:29 PM IST (Updated)
3 Min Read

The US automobile market could be headed for a prolonged period of decline as falling birth rates, rising vehicle prices and changing consumer preferences erode demand over the next 15 years, according to a report by consulting firm Bain & Company, CNBC reported.

The consultancy estimates annual vehicle sales in the US could decline by more than 20 lakh units by 2040 compared with current levels, marking a sharp reversal for an industry that has historically grown alongside the country's population. The US last recorded a sales peak of 1.76 crore cars, SUVs and trucks in 2016.

Bain partner Mark Gottfredson described the convergence of demographic and technological shifts as a "perfect storm" for the industry. "It starts with the population declines. You're no longer a growth industry. You're a declining industry at a time when the technology is disrupting everything," Gottfredson told CNBC.

The consultancy noted that the US fertility rate stood at around 1.6 births per woman in 2025, well below the replacement level of 2.1. While immigration has historically offset slower population growth, Bain expects tighter immigration policies over the coming years to further reduce the number of future car buyers.

Younger buyers are stepping away

Affordability is emerging as one of the biggest barriers to vehicle ownership, particularly among younger consumers.

According to CNBC, citing S&P Global Mobility, the share of new vehicle registrations by buyers aged 18 to 34 has fallen from 12% in early 2021 to below 10% by mid-2025, while buyers aged 55 and above now account for nearly half of all new registrations.

Craig Daitch, founder of automotive research firm Telemetry, told CNBC that monthly payments on new vehicles have risen 30% over the past four years, with nearly one in five buyers now paying more than $1,000 every month for their auto loan.

Robotaxis and longer-lasting vehicles

Bain also expects autonomous mobility services to further dampen demand. If robotaxis become widely available and affordable over the next decade and a half, the number of vehicles per licensed driver could decline, prompting 10% to 20% of US households to give up one vehicle, CNBC reported.

The consultancy also expects vehicles to remain on the road for longer, reducing replacement demand. According to S&P Global Mobility, the average age of vehicles in the US reached a record 12.8 years in 2025.

Despite uncertainties around electric vehicle battery life and long-term software support, analysts told CNBC that high vehicle prices will force manufacturers to design cars capable of remaining in service for much longer.

Bain expects the intensifying competition for a shrinking customer base to eventually drive consolidation across the US auto industry.

(Edited by : Ajay Vaishnav)