Car sales will drop by about three million units globally this year, the largest decline since the recession in 2008.
According to Fitch Ratings, the roughly four per cent fallout in sales is worse than was projected earlier this year, and is largely attributable to a general downturn in the industry, affecting manufacturing and sales.
Chief economist at Fitch, Brian Coulton, says “The downturn in the global car market since the middle of 2018 has been a key force behind the slump in global manufacturing and the car sales picture is turning out a lot worse than we expected back in May.”
“The turnaround after the rapid growth seen over 2011 to 2017 has been a significant factor behind the slowdown in world manufacturing and global GDP growth…”– Fitch Ratings
The credit ratings agency estimates that approximately 77.5 million cars will be sold this year, roughly 3.1 million fewer units than was sold last year. And even that figure was a decline of 1.2 million units, the first such drop since 2009, according to data from the International Organisation of Motor Vehicle Manufacturers.
“The turnaround after the rapid growth seen over 2011 to 2017 has been a significant factor behind the slowdown in world manufacturing and global GDP growth, as discussed in Fitch’s May 2019 report ‘Cars and the World Economy,’” said Fitch.
In real terms, the decline is larger than was experienced in 2008, which saw sales fall by three million, however, that percentage drop was steeper at five per cent.
Poor performance in most of the world’s largest markets has contributed significantly to weakened sales. China, in particular, has seen an 11 per cent drop in the first 10 months of 2019 while the United States and western Europe have seen slumps of two per cent. Fitch said combined sales in Brazil, Russia and India are down 5.5 per cent over the corresponding period last year with little chance of a rebound come the New Year.
“There seems little reason to anticipate a rebound in global car sales in 2020, even if China sales see a marginal recovery of around one per cent,” Coulton said, adding that “This means that the auto market will likely continue to weigh heavily on global manufacturing and on economies with a high exposure to this sector, such as Germany.”