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China's auto market is key to trade disputes and tariffs

China's auto market is key to trade disputes and tariffs


Moody's said the outlook for the global auto industry would remain stable over the next 12 to 18 months, partly because of increased sales in China, India and Europe, foreign media reported.However, growing trade tensions and the threat of tariffs could hurt car sales next year.

The credit rating agency had forecast global light vehicle sales to rise 1.5 per cent this year and 1.3 per cent next year.However, continued trade and tariff disputes, rising interest rates and rising fuel prices could all contribute to lower car sales next year.At the same time, automakers must continue to invest heavily in alternative fuels and other technologies to meet environmental regulations and withstand new competitors and technological disruptions.

Moody's said the recent spate of profit warnings from major automakers showed the industry would face greater downside risks in the coming year.China's auto market is relatively stable and key to what moody's calls the outlook for the global auto industry.Although global car sales are expected to fall slightly next year, moody's thinks China will still see sales growth of 2 per cent or more next year.Higher sales in China are expected to offset declines in the U.S.Growth in emerging car markets such as Russia, India and Brazil will either remain strong or rebound in the coming months.

Tighter emissions regulations are a factor in the loss of cash resources, according to moody's.When President Donald trump announced the shelving of obama-era fuel economy standards, U.S. state governments and others abroad were setting their own standards.Many carmakers have had to spend money on new electric vehicles, as well as dealing with the challenges of upstarts such as tesla and Chinese carmakers.

Moody's said the financially sound automakers would be better able to cope with the additional consumption of resources, but that the increased spending would put more pressure on the otherwise low-margin automakers.

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