The outlook for global automotive manufacturers is stable and is projected to witness an increase of 7.7 percent in unit sales after an expected drop of 16 percent in 2020 amid the COVID-19 pandemic and its associated impacts, according to Moody’s.
In a report, released on Monday, Moody’s said that uncertainty about the global economy and the near-term direction of COVID-19 poses risks to its sales forecast.
After suffering a more significant drop than in 2009, recovery in auto shipments is expected to be uneven, with China to rebound faster than laggards like the US and Western Europe, Moody’s said.
“Although our sales growth forecast far exceeds our 3 percent threshold for a positive outlook, we are maintaining a stable outlook amid uncertainty about the global economy and near-term direction of the coronavirus pandemic; global sales are unlikely to return to previous peak levels until about 2025,” said Moody’s.
The report also said that the weak macroeconomic environment will make the sector’s restructuring and modernisation complicated.
It also expected that economic uncertainty will contribute to complicating restructuring and modernisation efforts in this regard, adding that automakers are likely to reduce elevated leverage quickly by repaying their debt as sales rebound.
Moody’s, however, stressed that the second wave of COVID-19 infections threatens to slow recovery in the market, expounding that the pace of recovery will fall short to a mid-single-digit unit sales growth rate in 2021 from the projected 2020 level of about 76 million global light vehicle sales.
Meanwhile, Moody’s pointed out that a strong recovery over the next 12-18 months is expected to result in a very low double-digit unit sales growth rate in 2021, with the healthy momentum likely to extend into 2022.
Moody’s also expected global auto sales to reach about 81.6 million units in 2021, followed by a further 6.8 percent increase in 2022, with total shipments reaching 87.1 million, adding that it does not expect annual global unit sales to approach 2018’s levels of 95 million units before about 2025.
In this respect, Moody’s expected that global sales are unlikely to recover to pre-downturn levels until midway through the decade.