“Nevertheless, we expect robust balance sheets to support most Asia-Pacific (APAC) automakers’ credit profiles,” it said.

In a statement, Fitch said the demand for vehicles in both the US and Europe remained robust in 2023 despite higher interest rates, and although supply constraints have eased, inventory levels remain relatively low.

“The supply and demand balance remains favourable despite higher incentive levels in 2023, especially in the US market,” it said.

The rating agency forecasted a mild US recession in early 2024 that could pressure demand.

“However, our forecast of 16 million units, a 5% growth from 2023, will still be well below pre-pandemic levels of 17 million units.

“We also expect growth to slow in Europe and demand to grow by 4%-5% in 2024,” it said.

Meanwhile, sales growth of passenger vehicles in China was weaker in 2023, with high growth in new-energy vehicle sales offsetting the decline in internal combustion engine vehicle sales.

Fitch expects the trend to continue in 2024 with passenger-vehicle sales seeing flat to low-single-digit growth.