The outlook for auto manufacturing remains negative as global sales of light vehicles are set to keep falling amid geopolitical dangers including the US-China trade conflict and Brexit, Moody's Investors Service said.

"We now expect global unit sales of light vehicles to fall 3.8% in 2019 and 0.9% in 2020," said Falk Frey, senior vice president at Moody's.

"Previously we expected growth. Our revised forecast largely reflects a further weakening in demand in western Europe and in China which was affected by the ongoing US-Chinese trade talks and a difficult year over year comparison."

US auto sales are still on track to decline this year, driven by modestly rising interest rates, less aggressive incentives and increased competition from the used car market. Japan is the only major auto market where annual sales are likely to increase, albeit modestly.

While Moody's expects no more than a modest decline in global auto sales through 2020, the risk to the downside is greater than it was a year ago due to a number of geopolitical factors. Trade tensions, particularly between the US and China, and the increasing likelihood of a no-deal Brexit could have both direct and indirect ramifications for auto manufacturers.