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Moody's: China drives global auto sales growth.

Summary: growth rate for US shipments set to decline

China will continue to drive global auto

sales growth over the next 12 to 18 months, while shipments of US-made

vehicles will slow, Moody's Investors Service says in a new report. The

outlook for the global automotive manufacturer industry remains stable,

which has been Moody's position since September 2011.

"We expect global sales of light vehicles to increase 3.2% this year,

before easing to 3% in 2015," says Vice President -- Senior Analyst,

Bruce Clark. "China continues to be the main buyer of light vehicles; its

share of that market is set to rise from 27% this year to 28% in 2015."

Auto sales in China grew 8% in the first seven months of this year, and

should meet Moody's full-year growth forecast of 8.1%, Clark says in

"Global Growth to Slow Modestly; China Remains World's Strongest Market."

Growth is likely to moderate next year, three years out from 2013's

rebound, but will continue in the medium term, spurred by China's

relatively high economic growth and relatively low vehicle penetration.

Growth in US unit shipments will slow from 4.3% in 2014 to a modest 1.5%

during 2015, Clark says. "Shipments from the US will moderate as the

supply of used cars rises, as an increasing number of vehicles come off

lease. Used car prices will drop as a result." Additionally, much of the

pent-up demand created during the 2009-10 downturn has been satisfied,

after rapid sales growth from 2011 through 2014.

In Western Europe, sales of light vehicles will grow by around 4.7% this

year on the back of higher-than-expected sales growth in the UK and

Spain. Moody's forecasts 1.6% growth for Western Europe in 2015, given

gradually improving economic conditions, with falling unemployment and

rising consumer confidence.

Meanwhile, in Japan, the effect of a hike in consumption tax has not been

as dramatic as expected. Indeed, in 2014 new car sales will be the

highest they have been for five years, surpassing the previous high in

2012 when consumers took advantage of tax incentives associated with the

purchase of eco-friendly cars such as electric vehicles and hybrids.

"Global auto sector profitability will be supported by continued demand

and cost-cutting over the next year or so," Clark says. "In the US,

pricing and production disciplines are being maintained, while in Europe

restructurings and recovering demand are easing pressure on profits,

while the Chinese market remains strong." Profit growth will however

remain vulnerable to regional cyclical downturns, he notes, due to

underutilized capacity, price discounting and other pressures.

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Publication:EMBIN (Emerging Markets Business Information News)
Geographic Code:9CHIN
Date:Sep 24, 2014
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