Daniel Mercer
An insightful analysis from Bain & Company, reported by CNBC, reveals that the U.S. automotive market is likely to shrink until 2024 due to increasingly fierce competition among manufacturers. This shift is driven by various market dynamics.
Bain highlights a notable decline in fertility rates and reduced immigration as contributing factors, resulting in fewer potential car buyers. The report indicates that the auto industry matured under the assumption of a steady 1% annual population growth, which has now stagnated. Bain indicates a significant shift in consumer behavior regarding transportation options, alongside the reality that many individuals find vehicle prices prohibitively high.
In a contrasting forecast, AutoForecast Solutions anticipates stagnant sales in the automotive sector for the next seven years. They noted that younger generations are increasingly opting for ride-hailing services like Uber or Lyft for their transportation needs. this prediction may overlook inflationary pressures affecting ride-hailing costs, which could lead to reduced usage as riders seek to cut expenses.
Bain’s analysis also points out that only 50% of 16-year-olds currently hold a driver’s license, a significant drop from the 70% seen between 1966 and 1984. the report suggests that most individuals do obtain their license by the age of 25.
A recent article in the Wall Street Journal compiled forecasts from major automakers like Ford, GM, and Toyota, concluding that approximately one million potential new car buyers have vanished from the U.S. market, likely for good.
It is widely recognized that new car prices have reached astonishing heights. Currently, there are no new vehicles available for under $20,000, with the average new car costing around $50,000. Bain reports that monthly payments for new vehicles have surged by 30% over the past four years. Alarmingly, one-fifth of these payments exceed $1,000, a reality millions of consumers face.
You may have observed that the average age of cars on the roads is increasing. According to the report, the annual “deregistration” rate of vehicles, indicating those taken off the road primarily due to scrapping, was 6% in the year 2000. This rate has dropped to 5% in 2025 and may decrease to 4.4% by 2040.
If you are considering purchasing a new vehicle, there’s a strong likelihood you are nearing retirement age. Consumers aged 55 and older account for nearly half of all new car purchases, as noted in Bain’s report, leading automakers to tailor their offerings to this demographic. In contrast, individuals aged 18 to 34 represented only 12% of new car registrations in 2021, a figure that fell below 10% last year.
Mark Gottfredson, a Bain partner, shared his insights with CNBC regarding the implications for automotive companies: “The competition in the U.S. will become extremely intense,” he stated. He emphasized that there are too many manufacturers and brands vying for consumers’ attention, suggesting that market consolidation is inevitable.
The prospect of nameplate consolidation raises concerns about its impact on consumers. There is a persistent demand for smaller, affordable vehicles such as sedans, which have become increasingly rare in the U.S. automotive landscape. Domestic manufacturers acknowledge the scarcity of compact cars but continue to prioritize more profitable SUVs over smaller models, which complicates the path to profitability.
Ethan Carter
