Going green, trade war challenge world auto industry — IMF

Going green, trade war challenge world auto industry — IMF

Tuesday, October 15, 2019

Print this page Email A Friend!

WASHINGTON, United States (AFP) — There is trouble on the horizon for the global auto industry, which faces new European anti-pollution standards, shrinking Chinese tax breaks and rising trade barriers, according to the International Monetary Fund.

In a report published Tuesday on the global economy, the IMF casts a glance at this manufacturing sector, which is confronting a fundamental transition: "decarbonization."

The industry contracted last year for the first time since the global financial crisis began, contributing to the current global economic slowdown.

"Near-term prospects for the industry remain sluggish, and efforts to decarbonize pose a fundamental challenge in the medium term," the report said.

Auto manufacturing -- which accounts for 5.7 per cent of global GDP and eight per cent of goods trade -- shrank by 1.7 per cent last year by volume of vehicles produced, according to the IMF.

In China, the world's largest auto market, auto sales fell by three percent, their first decline in 20 years. Similar declines were recorded in Germany, Italy and Britain. In the United States, sales have continued to rise, but only slightly.

The worsening performance has sent share prices for the 14 largest manufacturers down by 28 per cent on average, the report said.

The auto industry's retreat shaved 0.4 per cent off of global GDP last year, while auto exports, even by the world's largest manufacturers, fell 3.1 per cent.

For this year, industry analysts forecast a four percent decline, the report said. It blames tariffs in the US-China trade war, which have made China's US auto imports more expensive.

In Europe, falling demand for diesel-powered autos, Brexit uncertainty and new emissions tests expected at the end of 2019 are weighing on industry.

Among the major causes of last year's slowdown are new European pollution standards known as WLTP (for Worldwide Harmonized Light Vehicles test).

"The large number of models requiring certification led to bottlenecks at testing agencies and several automakers had to adjust production schedules to avoid unwanted inventory accumulation," the report said.

This trend has been exacerbated by slower demand in some emerging markets like Turkey, and above all in China, where the end of tax breaks for auto buyers has hurt demand.

Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaper-login




1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy

comments powered by Disqus



Today's Cartoon

Click image to view full size editorial cartoon