A new analysis from Bain & Company, as reported by CNBCpaints a picture of a shrinking U.S. auto market between now and 2024, as market forces make the auto business uncomfortably competitive.
Bain cites declining fertility, along with declining immigration, as the cause; In other words, there are fewer people buying cars to begin with. The auto industry matured, the report says, amid expectations of 1% population growth per year, and population growth is now virtually stable. But Bain says there’s also the issue of changing “behavior” among transportation consumers. Oh, and Bain also acknowledges that cars are too expensive for many people now.
A different forecasting company called AutoForecast Solutions told CNBC that it expects stable sales for about the next seven years, telling that publication, “When you look into the future, young people are more likely to use Uber or Lyft when they go somewhere.” If this is intended to be a projection about the future, it could be a fanciful assumption in itself, as inflation continues to affect ride-hailing appsand passengers appear to be cutting back on spending to save money.
However, Bain points out that today, only half of 16-year-olds have a driver’s license, compared to 70% between 1966 and 1984. Although Bain also says that “most people” manage to get their license by the time they are 25.
A report last month in the Wall Street Journal combined projections from Ford, GM, Toyota and other automakers, and concluded that A section of around a million new car buyers has disappeared. of the American economy, probably never to return.
It has been widely reported that new cars in general are surprisingly expensive now. There are literally no new cars under $20,000 in the United States, and the average cost of a new car is around $50,000.. As a result, according to Bain, monthly payments for new vehicles have increased 30% in four years. Somehow, one-fifth of monthly new vehicle payments exceed $1,000. Millions of people are paying that, if you can believe it.
And you may have noticed that the cars on the roads are simply older. The report says that in 2000, the annual rate at which cars were “deregistered” or taken off the road (mostly scrapped) was 6%. In 2025, that figure was 5% and could be 4.4% in 2040.
But if you are When purchasing a new car, there is a good chance that you are approaching retirement age. Consumers 55 and older buy nearly half of new cars, according to the Bain report, and so automakers are adapting to their preferences. People aged 18 to 34 accounted for 12% of new car registrations in 2021, and that figure was down from 10% last year.
Mark Gottfredson, a partner at Bain, told CNBC what he thinks the consequences will be for the auto companies themselves: “Competition in the United States is going to be fierce,” he told them, adding: “There are too many automakers and too many brands competing for consumers. The market will have to consolidate.”
There is little reason to think that brand consolidation will benefit consumers. we long small and normal cars like sedans, which are now rare or nonexistent in the United States, at normal prices. American car manufacturers recognize and regret he lack of small cars. But the margins automakers get away with relative to manufacturing costs offer no path to profitability compared to the gargantuan ones, and more profitable, SUV.
