S&P Global Ratings believes global new light-vehicle sales could recover by between 10% and 12% in the U.S. in 2021, following a 15% to 20% decline in 2020 as a result of the Covid-19 pandemic.
Sales in China could grow by between 2% and 4% next year, after seeing an 8% to 10% decline this year.
Sales in Europe are expected to surge by between 9% and 11% in 2021, compared with a decline of between 15% and 20% in 2020.
In the rest of the world, new light-vehicle sales could recover by between 6% and 8%, following a 15% drop this year, says S&P Global Ratings.
In total, the global market could see a recovery in sales of between 6% and 7% in 2021.
S&P Global Ratings says it expects a global recession this year, with the risks remaining “firmly on the downside”.
Initial China data suggests that this country’s economy was hit far harder than projected, although tentative stabilisation has begun. Europe and the U.S. are following a similar path. S&P Global Ratings says central banks have sharply reduced policy rates and resumed assets purchase and liquidity injections.
“Fiscal responses are lagging – but gathering pace.”
German automakers downgraded
Covid-19 has seen ratings downgrades of German auto makers BMW and Daimler, with the outlook on Volkswagen (VW) now negative.
“In response to the weaker demand – VW, BMW, and Daimler have announced production shutdowns, and we expect their revenues and cash flow will take a hit in 2020 before market conditions recover next year,” says S&P Global Ratings.
“We are lowering our long-term ratings on BMW and Daimler by one notch, while revising our outlook on VW to negative.
“The negative outlooks indicate risks linked to the duration of the Covid-19 pandemic and its impact on the global auto industry and on the three automakers in particular.”
S&P Global Ratings lowered its long-term issuer credit ratings on BMW AG to ‘A’ from ‘A+’ and affirmed its ‘A-1’ short-term issuer credit ratings.
It also lowered its long-term issuer credit ratings on Daimler AG to ‘BBB+’ from ‘A-’ and affirmed its ‘A-2’ short-term issuer credit ratings.
S&P Global Ratings revised its outlook on VW to negative from stable and affirmed its ‘BBB+/A-2’ long- and short-term issuer credit ratings.
The company says it expects all three automakers to see a steep decline in revenue and cash flow this year owing to weak demand, especially in Europe, as a result of the Covid-19 pandemic and restrictions imposed by governments to reduce contagion risk.
“Based on our estimates, available liquidity at the three German auto manufacturers should allow them to cover the costs associated with a production shutdown of at least three months,” notes S&P Global Ratings.