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In Germany, auto suppliers downbeat as China-U.S. trade standoff escalates
Reuters | 2019/5/10

BERLIN -- 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 light-vehicle demand.

Automakers and their suppliers are grappling with a downturn in vehicle demand, particularly in China, the world's largest market, which saw sales decline 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 the 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.

The U.S. Trade Representative¡¯s office filed paperwork to formally raise tariffs to 25 percent from 10 percent on about $200 billion a year of Chinese imports effective on Friday, carrying through on a threat made by Trump over the weekend as talks with Beijing deteriorated.

China responded Wednesday by saying it will retaliate if the U.S. moves forward.

Continental CFO Wolfgang Schaefer said 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.

Bosch CFO 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.

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