U.S. Auto Industry to See Limited Growth, Rising EV Pressures, Says S&P Global

🗝️ Key Points

• 14, 2024 — S&P Global sounded the alarm on the U.S.
• auto industry, Stating it faces limited growth and rising challenges over the next couple of years.
• The global financial services giant cited economic pressures as likely to impact margin and cash flow improvements.

NEW YORK, Oct. 14, 2024 — S&P Global sounded the alarm on the U.S. auto industry, stating it faces limited growth and rising challenges over the next couple of years. The global financial services giant cited economic pressures as likely to impact margin and cash flow improvements. In a report released Monday, S&P Global Ratings Autos Managing Director Nishit Madlani stressed the difficulties for automakers and suppliers, particularly those impacted by lower credit ratings.

The Outlook for U.S. auto sales growth over the next couple of years is modest, with only a 1% to 2% increase expected. Moreover, rising unemployment will likely weaken consumer purchasing power, further impacting sales. Also, the S&P projected a 6% to 8% drop in new vehicle transaction prices through next year as automakers offer greater incentives and consumers shift toward lower-priced models.

Despite the sluggish sales in 2024, battery electric vehicle (EV) and plug-in hybrid sales will likely improve, reaching a market share of nearly 20% by 2026. However, S&P warned that the EV sector will face sizeable competitive pressures, with price sensitivity among consumers and concerns over battery range, charging infrastructure, and technology.

Additionally, Tesla’s (TSLA, Financial) Model 3, for instance, saw sizeable market share losses despite price cuts, underscoring the pressing challenge for automakers to achieve bottom-line parity between EVs and traditional vehicles.

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