Ageing population to stall N. American car sales

North America’s rapidly ageing population will shrink new car sales in coming decades, forcing automakers to rely on replacement demand, a new report by Scotia Economics found.

The baby boomer generation, which accounts for more than half of all new vehicle sales and 60% of all drivers, are beginning to retire and are unlikely to buy as many cars, the report said.

The generation born between 1945 and 1963 boosted annual car sales from an average 10 million units in the 1960s to a peak of 17.4 million over the past decade.

The number of young drivers, in the 16 to 29-year age range, is growing at the slowest pace since the mid-1990s, meaning there will be a sharp drop in the number of people buying cars, it said.

Growth in the vehicle buying population will slow to 0.6% a year in Canada, compared with 1.4% over the past 50 years, it said.

Global car sales are just beginning to recovery from last year’s slump, posting a double-digit gain in January for the fourth consecutive month. The fastest growth is in China, where volumes more than doubled making it the world’s largest auto market, according to Scotia’s Global Auto Report.

In Canada and the U.S., the bank forecasts car and light truck sales to rise to more than 13 million units this year from 11.9 million last year.

In the longer-term, carmakers in North America will have to depend on people replacing old vehicles rather than new buyers coming into the market, Scotia said.

Historically 0.6% of U.S. cars on the road are replaced each year, compared with 0.7% in Canada. Almost half of the 250 million cars on the road in the U.S. are about 10 years-old and will need to be exchanged, it said.