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19/09/2018 14:17

Outlook for auto sector stable into 2019 despite tariffs

[ET Net News Agency, 19 September 2018] The outlook for the global automotive
manufacturing industry remains stable over the next 12 to 18 months, reflecting
expectations for steady demand across key regions despite looming challenges, Moody's
Investors Service said in a report today.
Moody's report, "Automotive manufacturing -- Global, Modest growth in light vehicle
sales to continue into 2019 amid threat of US tariffs", is available on www.moodys.com.
Moody's subscribers can access this report via the link provided at the end of this press
release. This report does not constitute a rating action.
"While global auto sales so far this year support our full-year 2018 forecast, we see
greater risks emerging that could hurt sales next year, including trade and tariff
disputes, rising interest rates and higher fuel prices," said Falk Frey, a Moody's Senior
Vice President and author of the report. "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."
Moody's forecasts global light vehicle sales to grow 1.5% this year and 1.3% in 2019.
Looking across the regions, auto sales in China are expected to grow 2% this year -
slowing from 3% in 2017 - and 2.5% in 2019.
US light vehicles sales will likely cool in the coming months. Rising interest rates,
higher vehicle prices and the threat of tariffs on auto imports are likely to make
consumers consider a used car or delay buying a new one.
Although US light vehicle sales are expected to fall by 1.2% in 2018 and 0.6% next year,
they will remain strong relative to historical levels and are on track to reach 16.9
million units this year.
Moody's expects Western European sales 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.
Recent profit warnings from leading carmakers suggest that the sector will face greater
risk in the year ahead. The automotive sector is still highly cyclical and the operating
environment could deteriorate quite rapidly, due to factors such as new import tariffs or
rising commodity costs.
Manufacturers will continue to face mounting environmental policy pressures, which will
likely lead to stricter emissions-reducing regulatory targets, rising pressure on margins
and cash flows, changing consumer preferences and technological disruptions. (KL)

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