By The Nation
“Worsening global economic conditions, the trade war between the US and China, and the high cost of innovation for carmakers will continue to dampen sales,” S&P Global Ratings credit analyst Vittoria Ferraris noted.
“We expect auto manufacturers will suffer some margin erosion, particularly in the mass-market segment, as they may struggle to fully pass through the increased cost of connectivity, electrification, and autonomous driving. These rising costs will translate in higher auto prices and damage consumer affordability, additionally deterring car buyers,” she added.
On the plus side, persistently low interest rates should support affordability, while a rich pipeline of new models featuring sophisticated upgraded connectivity and electrification options and autonomous solutions will be attractive for the market. “However, we do not think this will be sufficient to raise global light vehicles sales next year, following the dip in 2019 sales that we estimate this year,” Ferraris said.
“We now expect light vehicle sales in China to decline by 7 per cent-9 per cent this year, while we foresee a 3-per-cent decline in the US and up to a 2-per-cent decline in Europe.
“For 2020 and 2021, our base case assumption is for zero to 1-per-cent growth in global light vehicle sales. We expect all market regions will experience volume weakness, except in China, which may see a modest rebound, although not before 2021.”