Continued weakness in the sales of U.S. autos will keep a lid on the sector for up to 18 months according to Moody's Investor Service.
In a report Tuesday, Moody's claimed that U.S. auto sales will shrink 3.6 percent in 2017 and by 0.6 percent next year as low-cost lease deals prove harder to find.
"While steady global GDP growth will drive a bigger demand for cars in key markets like China, Japan, and India, we expect U.S. car sales to weaken and slow the speed of growth for the automakers sector globally to less than 2 percent into 2018, and so our sector outlook remains negative," said Falk Frey, Senior Vice President at Moody's.
According to Autodata Corporation, the annual rate of vehicle sales in the United States decreased to 16.14 million in August from 16.77 million in July.
U.S. auto sales have been on a downward trajectory since December 2016.
The Moody's report added used car prices should fall as large numbers of vehicles come off lease but noted that demand for new vehicles could be supported by the destruction caused by Hurricanes Irma and Harvey.