The Economist Intelligence Unit (EIU) forecasts that automakers risk supply chain disruption from trade war if the US-China trade dispute escalates. Find out why t hey believe the US-China trade dispute will dramatically disrupt the global automobile industry!
EIU : Automakers Risk Supply Chain Disruption
According to the Economist Intelligence Unit (EIU), additional tariffs imposed on Chinese auto components by the US has provoked China into raising tariffs on US car imports.
This will turn into a global trade war if the US continues with more tariffs on the remaining trade – with US-Japan trade and US-Europe trade also at risk.
The EIU further reports successful renegotiation of NAFTA has eased tensions in North America, but any downturn in business and consumer confidence could undermine sales.
Further Risks Facing Automakers
- Brexit: UK’s exit from the EU in March 2019 will impact the automotive sector unless a comprehensive trade deal is struck.
- EU and US emissions tests: the introduction of more stringent emissions tests in the EU has already hit car sales. The US has frozen its emission targets for vehicles, but risks a legal battle with states such as California over the decision.
- China’s NEV rules: In January 2019 China will enforce targets for new energy vehicles (NEVs), which state that manufacturers of mass vehicles in the country must earn NEV credits worth 10% of their sales. Many carmakers will find these targets hard to reach.
Forecast And Hope For 2019
The Economist Intelligence Unit (EIU) has already cut its growth forecast for new car sales from 5.3% to 2.7% in 2019.
However commercial-vehicle (CV) sales will rise by 2.7% from the previous forecast of 5%.
Global sales of new fully electric vehicles (EVs) will reach 2.2m units, spurred by new emissions targets in the EU and NEV targets in China.
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