Vehicle Density Survey Signals Potential of Growth for North American Auto Suppliers

What You Need to Know:

• TD Cowen’s 2026 Vehicle Density Survey points to resilient U.S. auto demand despite macro concerns.
• Respondents expect a 7% rise in vehicles per household over the next two years, up from 3% in last year’s vehicle density survey.
• Findings support an above-consensus outlook for U.S. auto demand and SAAR through 2028.
• North America-exposed auto suppliers may benefit most from potential production upside.
• Key risks include macro conditions, oil prices, USMCA, affordability, competitive intensity and capacity ramps.

The TD Cowen Insight

The results of our 2026 Vehicle Density Survey were surprisingly positive given the broader economic backdrop. Respondents in our proprietary research expect a +7% vehicle density gain (cars/household) in the coming two years versus last year's +3%. The survey findings point to potential North American production upside in 2027-28 as new U.S capacity will likely be met by strong demand. Suppliers would be key beneficiaries to such a move.

Our Thesis

The macro backdrop has raised fresh concerns around the sustainability of U.S. auto demand. The problem with using traditional forecasting methods is that they've long failed to incorporate two unique traits of the U.S auto market:

• shifts in vehicle density (vehicles/household), where a 1% change can impact SAAR (seasonally adjusted annualised rate) by ~3 million and
• installed-base analytics.

We developed proprietary tools for both, which helped us navigate through last year's tariff concerns. Our fresh vehicle density survey revealed surprisingly positive results, pointing to a robust +7% expected rise in U.S vehicle density over the next two years, even better than the +3% observed in our June 2025 survey. Similarly, the "More/Fewer" ratio of 2.1x was far better than last year's 1.6x.

Macro remains a risk, but our latest survey supports an above-consensus U.S auto demand view. Will stronger demand show through more so in price or volume? In the near term, tight supply and affordability constraints favor price/mix. However, we expect this to reverse in 2027-28 on incoming capacity, suggesting significant production upside versus consensus thinking. That's our main call coming out of the survey, and it inherently favors North America-exposed auto suppliers.

What You'll Find in Our Full Research Report

• In early May 2026, we ran our proprietary vehicle density survey, which we believe gives us a critical edge forecasting the direction of vehicles/household. Without a survey like this, we think it becomes difficult to properly forecast U.S auto demand.
• Our updated vehicle scrap model.
• New this year: a plant-by-plant U.S capacity analysis supporting our production upside thesis.

Financial and Industry Model Implications

We continue to forecast above-consensus low-single digit U.S. industry revenue growth, but this now feels more conservative. Our 2026E-2028E SAAR are 3-6% above consensus. There's ample potential upside to 2027-2028 North American production expectations, which could drive positive earnings revisions along with multiple expansion since production hasn't grown since 2023.

What To Watch For

Over the near term, the macro and oil price situation remains fluid and presents risk to our call, even though our survey captured consumer sentiments as of early May. On the supply side, we want to monitor several factors that could influence production rates into next year:

• USMCA,
• competitive intensity,
• vehicle affordability (improving but still constrained) and
• the ramp of new vehicle capacity, which we feel could tilt the balance back to volume growth starting next year.

We're also watching consumer credit trends, though recent data has looked encouraging.