Temporary factors are likely to cause output in the auto sector to fall in the coming months. The period of restocking that has supported production appears to have largely run its course, both at home and abroad, while the damage caused to Japanese factories by the recent floods in Thailand will have a knock-on effect on auto production in Japan and elsewhere.
More worryingly for the industry, global demand is weaker and the risks are stacked to the downside, particularly with the escalating sovereign debt crisis in the euro-zone threatening to plunge the region into recession.
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