articles Corporate /en/research-insights/articles/the-u-s-auto-industry-s-historic-sales-run-will-taper-off-over-the-next-12-24-months-negative-rating-bias-could-intensify-some content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List
S&P Global Ratings

The U.S. Auto Industry's Historic Sales Run Will Taper Off; Negative Rating Bias Could Intensify Some

S&P Global Market Intelligence

4Q 2019 Outlook: A Range of Convenient Enemies – U.S. Trade Policy

S&P Global Market Intelligence

Brexit Watch: BP, Shell Provide Temporary Boost to British Exports

S&P Global Market Intelligence

Tariff Quote Watch: Volvo Looks To Swerve Around Tariffs With Cost Cutting

S&P Global Market Intelligence

Tesla Exports, Hyundai EV Imports Surge but U.S. Auto Sales Slip


The U.S. Auto Industry's Historic Sales Run Will Taper Off; Negative Rating Bias Could Intensify Some

Highlights

S&P Global Ratings expects U.S. light-vehicle sales to decline by nearly 3% year-over-year in 2019 before stabilizing at about 16.2 million-16.5 million units in 2020 and 2021.

Overall, we don't expect the modest dip in auto sales to lead to downgrades for automaker and supplier ratings in 2019-2020. However, it will compound the current negative ratings bias driven by pressures in the aftermarket, rising commodity costs, and firm-specific underperformance.

We have increased the overall odds of a recession (12 months out) to 25%-30%, up from our assessment of 20%-25% in May. We believe the Fed will be cutting rates during the third quarter, which is likely to limit the sales decline in 2019 somewhat.

With the large influx of late-model vehicles coming off lease, used vehicle prices will likely decline 2%-3% in 2019. The decrease would have been larger if not for the continued strong demand for these vehicles.

Despite increasing sales at Tesla, electric and plug-in hybrid vehicles' combined market share will likely remain under 3% in 2019 because of the reduced tax subsidies for some manufacturers.

Jul. 16 2019 — With increased overall odds of a recession (12 months out), declining used vehicle prices and ongoing geopolitical risks, U.S. automakers face a tough road ahead. Overall, light vehicle sales declined about 2% in the first half of 2019, with higher fleet demand partially offsetting the decline in retail sales and sales of SUVs and trucks continuing to dominate the market. S&P Global Ratings now expects a 3% decline in light vehicle sales in 2019 to 16.7 million units (revised up from 16.6 million). We expect a further decline toward 16.2 million by 2021, the lowest level since 2014.

At the same time, we expect that weakening growth momentum and a benign inflation outlook will now prompt the Fed to lower interest rates--perhaps with a cut of 25 basis points (bps) during the third quarter. Over the next 12 months, we do not expect a steep decline in auto sales as automakers launch newly updated trucks and utility vehicles, while largely maintaining incentive discipline amidst low gas prices and potentially lower financing costs later this year.

Following the Great Recession, U.S. auto sales hit a trough of 10.4 million units in 2009 before revving up again. Sales significantly outpaced GDP growth for six consecutive years and peaked at 17.4 million units in 2016. We believe the declines in 2017 and 2018 stemmed from historically low interest rates, tax refunds, abundant incentives, and low gas prices in previous years having motivated buyers to purchase vehicles sooner than they otherwise would have.

Read the Full Report
Download