New-car sales in North America are pretty much destined to decline no matter what, according to the Canadian economic research firm Scotia Economics.
The United States and Canada have rapidly aging baby boomer populations that will buy fewer new vehicles as they grow older, forcing automakers to rely strictly on replacement demand. People born between 1945 and 1963 drove up average annual car sales, but now they are retiring and done buying cars.
Meanwhile, Scotia’s Global Auto Report found the number of drivers age 16 to 29 is growing at the slowest pace since the mid-1990s. The two trends should meet to create a sharp drop in the number of people buying cars, which means automakers will mostly have to target replacing old vehicles rather than selling to new drivers.
Historically, 0.6% of cars on the road in the U.S. are replaced each year, and right now almost half of the 250 million cars on U.S. roads are 10 years old and will need to be replaced in the coming years, the report says.
