Gloomy outlook for car dealers

Moody’sr rating agency has changed it’s on the global auto manufacturing industry to negative from stable, which is not good news for Panama auto salesmen already hit by a two-year decline. The outlook change is driven by the expectation that global light vehicle sales will not recover meaningfully in 2019 and 2020 after declining during the latter part of 2018. Global light vehicle sales totaled 94.9 million units in 2018, short of the previous forecast of 95.5 million.

“We now expect unit sales growth of just 0.5% in  2019, down from our previous forecast of a 1.2% gain, which had assumed a stronger finish in 2018. For 2020, we expect growth to remain modest at around 0.8%. Our sales forecasts for this year and next year fall below the 1%-3% growth range for a stable outlook says the report/.

Extended decline
 Due to a difficult year-over-year comparison with strong sales during the first half of 2018, we expect auto sales to extend their decline during the first two quarters of 2019 before recovering somewhat in the second half. The recovery will also be supported by the completion of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) licensing process in Europe and policy guidance that the Chinese government announced at the end of January to boost auto purchases.

Global economic growth prospects will continue to weaken throughout 2019 and into 2020. We expect G-20 GDP growth of 2.9% in 2019 and 2.8% in 2020, down slightly from 3.2% in 2018. The continued global economic expansion, albeit at reduced levels, supports our assumption that the global light vehicle market will not decline in 2019 and 2020. However, some regions, especially in developed markets, may have already surpassed the top of the industry cycle. We expect somewhat stronger growth in developing markets, like China, and in light commercial vehicles, which benefit from macroeconomic growth.