Moody’s foresees negative 2020 for carmakers

Moody’s outlook for global automotive manufacturers in 2020 is negative, driven by expectations of a continued decline in global light vehicle sales amid weakening economic growth in key markets.

The outlook is based on Moody’s forecast of a -0.9% decline in light vehicle sales in 2020, following a projected -3.8% decline in 2019.

US light vehicle sales will slip -0.6% in 2020 after falling by a projected -2.9% in 2019; however, low unemployment, healthy consumer sentiment and continued modest GDP growth will limit the decline. General Motors’ new contract with the United Auto Workers will “…provide adequate operating flexibility to contend with cyclical downturns and the transition to battery electric vehicles and autonomous driving technologies,” Moody’s says in a report sent to Kallanish.

Western European light vehicle sales will fall -3% in 2020, widening from a projected -2% contraction in 2019. Demand remains constrained by a weakening macroeconomic environment and continued Brexit uncertainty.

China’s overall auto sales should however rise 1% in 2020 thanks to supportive policy guidance announced during 2019.

Automakers face mounting environmental policy pressures, such as stricter emissions-reducing regulatory targets by 2021, with most not strongly positioned for the transition to a low-carbon future, Moody’s says. Toyota is already very close to meeting its targets, while German premium automakers are still 20%-30% short of their targets; Fiat Chrysler and Honda are furthest behind in meeting their targets, it adds.

The US administration, meanwhile, has delayed imposing up to 25% tariffs or other restrictive measures on imported autos and parts while negotiating with key trading partners.