Morgan Stanley sees 9% U.S. car sales dip from coronavirus

(Reuters) - Morgan Stanley MS.N expects the coronavirus outbreak will send U.S. auto sales down 9% this year, it said in an investor note on Wednesday. Before the outbreak, analysts had expected a modest decline of 1-2%.

Separately, researcher LMC Automotive said it expects concerns over coronavirus in the United States and other countries could drive global vehicle sales this year down 4% to 86.4 million, from 90.3 million in 2019. LMC previously had expected relatively flat global sales of 90.1 million.

In the United States, Morgan Stanley auto analyst Adam Jonas wrote that “demand shock” triggered by the spread of the virus could cause consumers to delay large purchases such as new cars.

He predicted U.S. sales could drop to 15.5 million vehicles, from 17.1 million in 2019.

LMC dropped its U.S. sales forecast to 16.5 million.

Automakers are due to report first-quarter sales in early April.

In midday trade, General Motors Co GM.N shares were down 3.5% and Ford Motor Co F.N shares fell 4.2%.

The National Automobile Dealers Association in early January had predicted a slight dip in 2020 sales to 16.8 million.

In his note, Jonas said coronavirus fears could have a ripple effect on used car sales and on consumer credit.

As the virus spreads, it will continue to have a negative impact on the auto industry, said Jeff Schuster, LMC president of global vehicle forecasts, adding, “volatility will remain with us until there is evidence of containment globally, and the lasting effect could spill into 2021.”

Reporting by Paul Lienert in Detroit; Editing by Marguerita Choy and Matthew Lewis