Moody's also says the growth in the global automobile sector will return only in 2021, at 1.5 per cent.
The coronavirus outbreak has reduced the demand and disrupted the automotive supply chains, as China is a major hub for auto components. This will impact the global auto industry in the long run, resulting in a further prolonged slowdown.
It also forecasts that Indian car sales will stabilize in 2020, with the auto sales to be relatively flat after declining 11.8 per cent in 2019 amid the slowing economic growth. The agency expects Indian auto sales to increase by 0.5 per cent in 2020, supported by stimulus measures like discounts on BS-IV cars.
However, weak consumer demand and tight liquidity will likely limit any major improvement in car sales in 2020. In the year 2021, Indian car sales are expected to increase by 2 per cent, claims the agency.In China, the epicentre of the Covid 19 outbreak, auto sales including both PV and CV is expected to decline by 2.9 per cent in 2020, claims Moody's. This means even weaker performance as previously, the agency projected a 1% growth for the Chinese auto sector in 2020.
It says the factors like consumers steering clear of crowded areas including auto dealerships, corporate demand for vehicles weakening, the slowdown in Chinese auto space will prolong. Growth in the country's auto sales is expected to be back in 2021, with a rebound of around 2.5 per cent.
The agency has also made a forecast that the global GDP growth in 2020 to be at 2.4 per cent and 2.8 per cent in 2021. As it says, the spread of the coronavirus will be contained by the end of the first quarter, allowing for the resumption of normal economic activity in the second quarter.
