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Home / Business News / Global auto sales expected to fall 20% from last year, says S&P

Global auto sales expected to fall 20% from last year, says S&P

The stock market index has attributed the likely fall to sales and production disruption due to the ongoing novel coronavirus pandemic.

business Updated: Oct 07, 2020, 07:11 IST
Asian News International | Posted by Karan Manral
Asian News International | Posted by Karan Manral
Singapore
General Motors Co. Chevrolet sports utility vehicles (SUV) are displayed for sale at a car dealership in Grove City, Ohio, US (Ty Wright/Bloomberg)
General Motors Co. Chevrolet sports utility vehicles (SUV) are displayed for sale at a car dealership in Grove City, Ohio, US (Ty Wright/Bloomberg)

Global light vehicles sales are expected to fall by 20% this year compared with 2019 following sales and production disruption due to the Covid-19 pandemic, S&P Global Ratings said in a report published on Friday.

“This new forecast follows a first-half 2020 sales slump of 25%, an unprecedented shock for the global industry,” said S&P Global Ratings analyst Vittoria Ferraris.

“We project global vehicle sales to expand 7 to 9% both in 2021 and 2022, meaning that light vehicle sales two years from now will still be 6% below 2019 volumes.”

Any upside to our sales scenario will stem mainly from the Chinese market, the most dynamic but least predictable among the main global auto markets, said Ferraris adding that China may be the only market to catch up with 2019 volumes by the end of 2022.

S&P said its global auto sales forecast is more conservative than general market standards.

But it deems it consistent with the pandemic-related dramatic squeeze on potential car-buyers’ finances across the globe combined with pressure on affordability stemming from higher prices of new hybrid and electric vehicles that carmakers are trying to promote in Europe and China.

Many automakers’ and suppliers’ plants are likely to operate at sub-optimal capacity and at less efficient levels for the remainder of 2020. A large proportion of rated issuers will end 2020 with a higher debt load than at the start of the year.

“We, therefore, expect companies’ profitability and cash flow adequacy metrics to be weaker in 2021 than in 2019,” said S&P.

“This combined with the enduring profitability pressure generated by the transition to electric mobility (unimpeded by Covid-19) and the sizable investments needed to upgrade existing and develop future technology leads us to maintain a negative outlook for the auto industry despite some evidence of recovery.” (ANI)

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