German auto suppliers downbeat as trade dispute simmers

BERLIN/HAMBURG (Reuters) - German automotive suppliers Continental and Bosch do not expect a speedy recovery of the global auto market, as an escalating trade conflict between the United States and China threatens to compound already weak car demand.

FILE PHOTO: A tyre of German tyre company Continental is pictured before the annual news conference in Hanover, Germany,March 7, 2019. REUTERS/Fabian Bimmer/File Photo

Automakers and their suppliers are grappling with a downturn in vehicle demand, particularly in China, the world’s largest car market, which saw sales slow down for the ninth month in a row in April.

Continental said on Thursday it was not expecting a market upturn until the second half of this year as it reported a 22 percent slump in first-quarter net profit, while Bosch said it expected sales to stagnate this year.

The outlook could darken further after U.S. President Donald Trump ratcheted up the stakes ahead of a visit by Chinese Vice Premier Liu He to Washington for two days of trade talks, saying China “broke the deal” and vowing not to back down on imposing new tariffs on Chinese imports.

Continental Chief Financial Officer Wolfgang Schaefer told Reuters that production in China remained volatile after falling 13 percent in the first quarter. After a slightly stronger March, April was weaker again, he added.

He said it was hard to make predictions due to the uncertainty surrounding U.S-China trade talks, but he expected only a “sideways development” in the second quarter.

Privately-owned Bosch, the world’s largest automotive supplier, said sales were nearly level with the previous year in the first three months of this year.

Chief Financial Officer Stefan Asenkerschbaumer said he expected sales to only be “slightly better” than last year in 2019 as Bosch grapples with a downturn in the global economy and headwinds from trade conflicts and Brexit.

Bosch forecast car production would fall by 3 percent this year to just under 95 million vehicles. “This will be the first time that production figures have contracted in two successive years since the financial crisis,” Asenkerschbaumer said.

It expects another sharp decline in China and much slower growth in India, as well as a considerable decline in automotive production in Germany. It forecast slightly weaker production for North America.

Shares in Continental were down 3.7 percent at 1042 GMT, the second-worst performance on Germany’s blue-chip index.

Editing by Mark Potter