Moody’s has lowered its forecast for global car sales for 2020 as the continued coronavirus outbreak reduces demand and disrupts automotive supply chains around the world.
The ratings agency expects global automobile unit sales to decline 2.5 per cent in 2020, narrowing from a 4.6 per cent drop in 2019, but worsening from the 0.9 per cent decline that we had previously projected for this year.
Outlook will remain negative in 2021, with only a small rebound of 1.5 per cent growth expected.
China will lead the decline, with a sales fall of 2.9 per cent expected over the course of the year, a substantial drop from the one per cent growth previously expected.
Moody’s said the fall would come as cautious consumers steer clear of crowded areas, including car dealerships, while corporate demand for vehicles is also expected to weaken as broader economic uncertainties cause companies to scale back capital spending.
Work stoppages and lower production levels because of government-mandated business days off, the reduced flow of migrant workers across China and disruptions in auto-parts supply chain have also lowered production levels.
The forecast assumes that the coronavirus will be contained by the end of the first quarter, allowing normal economic activity to resume in the second quarter.
Japan’s car market is the only one predicted to grow, but even this will be limited to a rise of 0.8 per cent, largely predicated on the launch of new models. Both Western Europe and US sales will fall.
Moody’s forecast comes after the China Passenger Car Association (CPCA) last week revealed that sales of passenger cars collapsed 92 per cent on an annual basis in the first 16 days of February.
According to data collected by the agency, only 4,909 vehicles were sold in the period, down from 59,930 in the same period a year earlier.
Car makers such as Nissan and Honda have suspended operations at their manufacturing plants for the time being, raising the risk of further disruption.
The coronavirus has wreaked havoc on the global car supply chain, as shutdowns in China have left manufacturers struggling to source the 30,000 or so parts needed for each car.