Moody’s revised global projected auto sales to slump by 20pc, down from the earlier forecast of 14pc as the impact of COVID-19 worsens. The ratings agency has assigned a negative outlook to the auto sector.
Moody’s cited sharp drop in economic activity amid the COVID-19 pandemic. The agency expects G-20 GDP for 2020 to contract by 4pc from a previously declared cut of 0.5pc. Auto sales would grow by 11pc in 2021 as the recovery in demand is likely to continue at a slower pace into the next year. In 2022, auto sales would grow by 5-9pc bringing total sales unit to around 85mn to 88mn which is less than 2019’s sales level of 90.2mn units.
April auto sales in Western Europe slumped 61pc as was expected, while in the US it was better than street estimates. In China, sales have improved gradually creating positive sentiments. Most countries have resumed auto production including China and European countries and the US is set to resume production around mid-May. Production of auto units would likely be far below capacity in the coming months in some parts of the world, according to Moody’s.
Demand in Europe would continue to dip and sales in the US could weaken further. China stands as the only major auto market slated for a healthy recovery in sales forecast. Japan auto sales would fall in the 2020 by 15pc. A stable outlook will be considered for the auto manufacturing sector, if auto sales grew by 1pc over the next 12-18 months with stable capacity utilisation.