Moody's: Global automotive outlook ‘stable’ despite tariffs

Frankfurt am Main, Germany – The outlook for the global automotive manufacturing industry remains stable over the next 12 to 18 months, according to Moody's Investors Service

The robustness reflects expectations for steady demand across key regions despite looming challenges, the ratings agency said in a report launched 18 Sept.

Nevertheless, emerging risks including trade disputes, rising interest rates and higher fuel prices could hit sales next year, according to report author Falk Frey, a Moody's senior vice president.

"Steady auto sales in China are a key driver of our global forecast, but growth will remain far more modest than the double-digit percentage gains seen as recently as 2016," said Frey.

Global light vehicle sales to grow 1.5% this year and 1.3% in 2019, forecasts Moody's. Sales in China, it added, should grow 2% this year - slowing from 3% in 2017 - and 2.5% in 2019.

However, US light vehicles sales are tipped to cool in the coming months on rising interest rates, higher vehicle prices and the likely impact of tariffs on imports.

Moody's expects US light vehicle sales to fall by 1.2% in 2018 and 0.6% next year, while staying on track to reach 16.9 million units this year.

Western European sales are forecast to grow by 2% in 2018 before slowing to 0.5% in 2019, while Japanese sales growth is forecast to slow to 0.1% this year, before accelerating to 1.3% next year.

Consumer demand for new cars will remain strong in India and will continue to rebound in Brazil and Russia, buoyed by improving macroeconomic fundamentals, Moody's added.

The firm’s analysis finished with a caution that “the automotive market could deteriorate quite rapidly, due to factors such as new import tariffs or rising commodity costs.”

Manufacturers, it added, are likely to see stricter emissions-reducing regulatory targets, rising pressure on margins, changing consumer preferences and technology-led disruption.