S&P Global Ratings on Sept. 17 said it expects global light-vehicle sales to fall 2% to 3% in 2019, with "virtually no growth" through 2020 and 2021.
The rating agency said the ongoing U.S.-China trade war, Brexit tensions and recession risks will continue to hurt global trade and erode consumer confidence, weakening the prospect for auto sales. Although new models and low interest rates could soften the blow, carmakers trying to adapt by introducing new tech, including electric, connected and self-driving vehicles, could face higher costs that will deter buyers.
Initially, S&P Global Ratings expected 2019 global auto sales to remain flat or decline by 0.5% year over year. For 2020-2021, Ratings expects sales to stay flat or increase to 1%.
All regions except China, which could see growth between 1% and 2% in 2020 and 2% and 3% in 2021, will likely experience volume weakness over the next two years, Ratings said.
Europe could see sales stabilize if a Brexit deal materializes, with sales expected to stay flat through 2021. Further deterioration would be unlikely, Ratings said, since most European markets have been declining in the past three years, with the exception of Germany.
The U.S., facing tariff threats and the growing risk of recession, could see European, Mexican and Japanese tariffs hit auto sales. However, U.S.-China trade tensions may not have a meaningful impact on sales, Ratings said. Carmakers can expect shrinking profit margins as demand for high-volume segments slow. For 2020 and 2021, Ratings expects sales to decline 1.2% and 1.8%, respectively, in the region.
For the 12 months to June 30, global automotive sales fell 6.4% year over year, down from 94 million vehicles in 2018.
