Boston, MA -- (SBWIRE) -- 03/14/2014 -- economic backdrop and the persisting drag of higher interest rates. Furthermore, we cannot neglect the fact that three quarters of auto sales are on loans and higher interest rates will eventually cause consumers to feel the pinch as well.

To be sure, our 2014 passenger car sales growth forecast of 8.1% does take into account a slowdown in car sales and we are happy to maintain that for now.

However, we are slashing our 2014 CV sales growth forecast as we believe the segment will continue to face headwinds from higher interest rates. Besides the rise in loan servicing costs for CV buyers, a large part of CV demand comes from interest rate sensitive sectors such as construction and infrastructure, which too will experience a slowdown. Indeed, our Infrastructure team recently downgraded its 2014 growth forecast for the construction sector from 6.9% to 6.3% (see 'Bearish Near-Term Construction Outlook In Full-Flight, October 24). Against this challenging backdrop, we have downgraded our 2014 CV sales growth forecast to 3.1%, to 350,000 units, from 7.5% previously.

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This will revise our 2014 vehicle sales growth forecast from 7.9% to 6.7%.

Long-Term Fundamentals Intact

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