[ET Net News Agency, 18 September 2020] 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, said S&P Global Ratings in a report titled "Global Auto Sales
Forecasts: Hopes Pinned On China".
"This new forecast follows a first-half 2020 sales slump of 25%, an unprecedented shock
for the global industry," said S&P's analyst Vittoria Ferraris.
The credit rating agency projected global vehicle sales to expand 7%-9% both in 2021 and
2022, meaning that light-vehicle sales two years from now will still be 6% below 2019
volumes.
S&P believes any upside to its sales scenario will stem mainly from the Chinese market,
the most dynamic but least predictable among the main global auto markets. It thinks China
may be the only market to catch up with 2019 volumes by the end of 2022.
"Our global auto sales forecast is more conservative than general market standards,"
said Ferraris. "But we deem 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 suboptimal capacity and
at less efficient levels for the remainder of 2020. What's more, a large proportion of
rated issuers will end 2020 with a higher debt load than at the start of the year.
S&P, therefore, expects companies' profitability and cash flow adequacy metrics to be
weaker in 2021 than in 2019. 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 the agency to
maintain a negative outlook for the auto industry despite some evidence of recovery. (KL)