New Delhi [India], November 28 : Global vehicle sales are anticipated to experience a slowdown in growth in 2024, influenced by weakened economic conditions and higher interest rates, according to Fitch Ratings.
While this poses challenges, Fitch remains optimistic about the resilience of most Asia-Pacific (APAC) automakers, citing robust balance sheets as a key factor in supporting their credit profiles.
In the face of economic headwinds and a tightening interest rate environment, Fitch Ratings projects a deceleration in global vehicle sales growth.
The weakened conditions are expected to be particularly impactful in the US and Europe, with a forecasted mild recession in the US during early 2024, potentially putting pressure on demand. Fitch's projection of 16 million units in the US market for 2024 represents a 5 per cent growth from the previous year but remains below pre-pandemic levels of 17 million units.
Despite these challenges, vehicle demand in the US and Europe remained resilient throughout 2023, supported by robust balance sheets and favourable supply/demand dynamics.
While supply constraints have eased, inventory levels remain relatively low, and higher incentive levels, especially in the US market, contributed to sustaining demand.
In China, the landscape of passenger vehicle sales witnessed a shift in 2023, marked by weaker overall sales growth but a surge in new-energy vehicle (NEV) sales.
Fitch expects this trend to persist in 2024, with passenger-vehicle sales experiencing flat to low-single-digit growth.
The electric vehicle (EV) sector, particularly in China, is anticipated to maintain robust growth, with NEV sales and penetration showing strength in 2024. However, Fitch predicts a slower pace of EV sales growth in other major markets, including the US.
The pricing dynamics in the global vehicle market present a mixed picture. While vehicle prices remained relatively resilient in the US and Europe in 2023, Fitch foresees potential weakening in 2024.
This could be attributed to mix normalization and higher incentives amid moderating sales growth. In contrast, the Chinese EV market is expected to continue facing intense price competition, driven by aggressive pricing strategies of local EV brands and efforts by global automakers' joint-venture brands to gain traction in EV sales.
As the global automotive landscape navigates through uncertainties, Fitch Ratings underscores the importance of APAC automakers' robust balance sheets in weathering the challenges.
While acknowledging the potential headwinds, Fitch remains cautiously optimistic about the credit profiles of most APAC automakers in the evolving global vehicle market.
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