The global auto sector faces a bleak near-term outlook, with sales expected to fall 13% this year and with scrapping premiums unlikely to have a long-term positive impact, according to Moody’s Investors Service.
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“Moody’s continues to forecast global double-digit volume declines in the sector in 2009, with limited prospects for a meaningful recovery in 2010,” Falk Frey, a senior vice president in Moody’s Corporate Finance Group, wrote in a report cited by AFP.
In the face of crumbling demand in the worldwide economic downturn, global vehicle sales in 2009 are projected to decline 13% from “the already low level posted in 2008,” the report said.
Manufacturers are likely to struggle this year and next to reduce high inventories.
Frey reportedly warned that that while production cuts should continue, “Moody’s cautions that they might be insufficient to trim inventories and bring next year’s volumes in line with demand, making deeper restructuring necessary.”
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By GlobalDataThe report also cautioned that efforts by governments to boost sales by offering bonuses to owners who agree to scrap their old vehicles and buy new ones “will only serve to bring forward demand – not completely solve the problem.”
Critical to the sector’s recovery, according to Moody’s, would be the availability of credit for both consumers and auto dealers.
