A new analysis piece by Bain & Company, CNBC reported on thispaints a picture of a contracting US auto market now and through 2024 as market forces make the auto business uncomfortably competitive.
Along with declining immigration, Bain points to declining productivity—in other words, fewer people to buy cars—as the cause. The report says the auto industry has matured amid population growth expectations of 1% per year, and population growth is now roughly flat. But Bain says there is also the issue of changing “attitudes” among transport consumers. Oh, and Bain also admits that cars are too expensive for many people right now.
A different forecasting firm, AutoForecast Solutions, told CNBC that it expects steady sales for about seven years, telling the publication: “When you look at the future, young people are more likely to use Uber or Lyft when they’re going somewhere.” If it is a prediction about the future, it may itself be an imaginary hypothesis, as inflation continues to hit programs calling for a rideand it seems riders are backing off to save money.
Even so, Bain notes that only half of 16-year-olds today have a driver’s license, compared to 70% from 1966 to 1984. Although Bain also says that “most people” start getting their license when they turn 25.
Last month, the Wall Street Journal compiled forecasts from Ford, GM, Toyota and other automakers and concluded that the tranche of nearly a million new car buyers has disappeared The US economy will probably never recover.
It’s common knowledge that new cars in general are now shockingly expensive. There is literally no new car in America under $20,000, and the average new car is around $50,000.. As a result, monthly payments on new cars have increased by 30% over four years, according to Bain. After all, a fifth of new car monthly payments are over $1,000. Millions of people pay it, if you can believe it.
And you’ve probably noticed that the cars on the road are getting older. In 2000, the annual rate of car “de-registration” or removal from the road (mostly junk) was 6%, the report said. In 2025, this figure was 5%, and in 2040 it could be 4.4%.
But if you there is When you buy a new car, there’s a very good chance you’re nearing retirement age. Consumers over the age of 55 buy almost half of all new cars, according to a Bain report, so automakers are catering to their preferences. In 2021, 12% of new car registrations were young people aged 18-34, while last year this number was less than 10%.
Bain partner Mark Gottfredson told CNBC he believes the results will be for the auto companies themselves: “Competition in the U.S. is going to be fierce,” 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 nameplate consolidation will benefit consumers. We are dying small, normal cars like sedans – now a rarity in the US – at normal prices. US car manufacturers confessing and lamenting the lack of small cars. But the price increases achieved by automakers relative to production costs do not offer a path to profitability compared to hulking, and more affordable off-road vehicles.
