After a weak first quarter, auto sales in 2019 are expected to fall more than previously forecast, according to S&P Global Ratings’ new report, “Worldwide Auto Sales Will Slump More Than Expected In 2019.”

The ratings agency said sales of automobiles would likely fall by 3% in China, compared with 2018. S&P had previously forecast growth of 1% to 2% in China for the year.

“The Chinese government has cut VAT for the manufacturing sector to 13% from 16% from April 2019, prompting some automakers to lower prices, but we see this move as too timid to support a strong recovery in the remainder of the year,” S&P said.

Sales in the U.S. will fall year-over-year, and sales in Europe will be flat.

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“We see auto sales declining by 3.6% in 2019 in the U.S., and subsequently stabilizing at around 16.3-16.5 million per year, down from our previous expectation of 16.8 million,” S&P said.

S&P had previously forecast moderate growth in the European market of about 1% to 2%.

“While from a macroeconomic perspective, we have good reason to believe that Europe’s economic expansion will regain strength in the second half of this year, we believe that industry-specific headwinds might weigh on auto sales, at least in Western Europe,” S&P said.

In April, the seasonally adjusted, annualized sales rate in the U.S. fell to 16.41 million, the lowest rate since February 2014 and below analyst estimates, according to a report from Automotive News.

“Forecasters have been expecting the market to slow as higher vehicle prices and higher borrowing costs squeeze many potential buyers,” Charlie Chesbrough, senior economist at Cox Automotive, told the trade publication at the time. “Robust employment conditions and a strong stock market didn’t seem to be enough to lift sales last month,” Chesbrough said.

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