Auto sector rebound could outpace global recovery: Moody's

27th May 2010, Comments 0 comments

The global auto sector could recover more strongly than the economy as a whole in several parts of the world, rating agency Moody's Investor Service said on Thursday.

"The recovery of the global auto sector looks to be stronger than the macro-economic recovery in many regions, driven by demand and pricing," a statement said.

While Moody's raised its outlook for the global sector to positive from stable a week ago, it also warned Thursday that certain risks could yet derail a robust recovery.

But Moody's senior vice president Falk Frey said that "compared to where the industry was a year ago, the turnaround in volume sales, demand and to a lesser extent in pricing has been faster than we anticipated."

The auto sector benefitted now from trimmed US capacity in particular, with Chrysler being absorbed by Fiat and General Motors and Ford streamlining their offers, the report said.

Globally, it cited the accounting firm PriceWaterhouseCoopers as estimating that capacity utilisation had risen to 72 percent from 66 percent, though it remained below the widely considered break-even point of 80 percent.

Demand had picked up meanwhile by 13 percent between January and April from the same period a year earlier, especially in the US, China and emerging markets.

Risks to the rosy forecast included rising prices of raw materials and concern over debt in Europe that might cut consumer spending and have a negative impact on bank financing, Moody's cautioned.

© 2010 AFP

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