articles Ratings /ratings/en/research/articles/200323-covid-19-will-batter-global-auto-sales-and-credit-quality-11398939 content esgSubNav
In This List

COVID-19 Will Batter Global Auto Sales And Credit Quality


CreditWeek: What Are The Biggest Risks To Credit Markets In 2024?


Instant Insights: Key Takeaways From Our Research


Credit FAQ: Pathway Vet Alliance LLC And The Vet Practice Management Industry


Credit FAQ: China To Avert 'Lost Decade', With Bright Spots Ahead

COVID-19 Will Batter Global Auto Sales And Credit Quality


While China appears to be starting to rein in the coronavirus outbreak, Europe and the U.S. are testing their capacity to contain the virus' spread. S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak between June and August, and we are using this assumption in assessing the economic and credit implications. We believe measures to contain COVID-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers (see "COVID-19 Macroeconomic Update: The Global Recession Is Here And Now," and "COVID-19 Credit Update: The Sudden Economic Stop Will Bring Intense Credit Pressure," published on March 17, 2020, on RatingsDirect). As the situation evolves, we will update our assumptions and estimates accordingly.

In these circumstances, we expect a material decline of light vehicle demand globally. We expect this decline will be particularly severe in the second quarter of the year, only gradually recovering thereafter provided that restrictive measures are effective in slowing contagion.

In our updated scenario, global light vehicle sales will likely decline by almost 15% in 2020 to less than 80 million units (versus 90.3 million in 2019).

Table 1

We Are Further Lowering Our Global Light Vehicle Sales Forecast
% year-on year change
--Previous projections*-- --New projections*--
2020f 2021f 2020f 2021f
U.S. (3) (1.80) (15)-(20) 10-12
China (5) 2-3 (8)-(10) 2-4
Europe (3) 0 (15)-(20) 9-11
Rest of the World (3) 0 (15) 6-8
Previous projections are as of March 5, 2020; new projections as of March 23, 2020. Source: S&P Global Ratings.

In response to fading demand, the large majority of global auto manufacturers have announced production shutdowns at most of their plants in Europe and in the U.S., and have switched to liquidity protection mode. Our revised sales scenario indicates intense credit pressures ahead for automakers. We expect that potential government stimulus packages and central banks' action to facilitate access to funding will only partially relieve these pressures.

In Europe, we now expect GDP to decline by 0.5% to 1% in 2020. Given our expectation of increasing social distancing measures and a progressive shutdown of commercial activities throughout Europe in an effort to curb contagion risk, we believe light vehicle sales are likely to decline in the 15%-20% range this year. We don't expect a bounce-back in 2021, but only a limited recovery, which would bring units sold to around 19 million (from 20.7 in 2019).

In the U.S., revised GDP forecasts indicate marginally negative growth in the first quarter and a heavier decline in the second quarter, before recovery begins in the second half of the year. After incorporating falling consumer sentiment, stock market declines, the impact of oil market-related demand, a liquidity crunch, and higher than expected unemployment claims, we forecast a fall in 2020 light vehicle sales in the same order of magnitude as in Europe (a 15%-20% decline). We forecast a low double-digit recovery in 2021, before the market settles at around 16 million units in 2022.

Despite evidence of recovery in China, we think it's likely that light vehicle sales will decline in the 8%-10% range this year on the back of the material first-quarter shock that has lead us to lower our forecasts of GDP growth to 2.9% in 2020. While 90% of the country's automakers have resumed production, we expect utilization rates to be running low and anticipate that companies will only slowly adjust production due to a gradually recovering supply chain and demand. The above scenario incorporates moderate stimulus from local governments, but does not factor in large-scale central government-led stimulus, which could be in the form of a significant purchase tax cut. It also excludes the possibility that production ramp-up might be disrupted by a shortage of components, owing to prolonged shutdowns at key overseas auto suppliers.

Related Research

  • The Global Recession Is Here And Now, March 17, 2020
  • Asia-Pacific Recession Guaranteed, March 17, 2020
  • The Sudden Economic Stop will Bring Intense Credit Pressure, March 17, 2020

This report does not constitute a rating action.

Primary Credit Analysts:Vittoria Ferraris, Milan (39) 02-72111-207;
Claire Yuan, Hong Kong (852) 2533-3542;
Nishit K Madlani, New York (1) 212-438-4070;
Katsuyuki Nakai, Tokyo (81) 3-4550-8748;

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at

Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to:

Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back