Large credit rating agency Moody’s has provided an usually pessimistic view of the car industry. Sales have peaked, its experts said. Demand in the two largest car markets has turned sour.

The forecast is a blow to believers in the world largest manufacturers, particularly General Motors Co. (NYSE: GM), Volkswagen, Toyota Motor Corp. (NYSE: TM) and Ford Motor Co. (NYSE: F). The stock prices of some of these have already started to fall sharply.

In a report titled “Moody’s publishes FAQ on autos and auto finance in face of off-lease oversupply, falling demand, loosening loan terms,” the firm’s experts voiced their evaluation:

Stagnant or falling demand for vehicles, a shift back to larger vehicles despite new energy efficient technologies, historically high levels of lease expirations and lengthening auto loan terms are among the dynamics affecting the outlook for bonds connected to auto financing in the US, Moody’s Investors Service says in a new report. Moody’s outlook for the global auto industry is currently negative.

And Moody’s Senior Vice President Bruce Clark wrote:

Our negative outlook for the auto industry reflects less robust demand in the US and China, two of the world’s most profitable auto markets, as well as the industry’s poor record when transitioning to weaker market conditions. The auto industry is challenging at the best of times due to cyclicality, low returns on capital and substantial, non-deferrable investments to develop new models.

Most of Clark’s comments are not new, but they sum up the industry’s problems. Drivers want big trucks and sport utility vehicles at the expense of the sales of smaller sedans and coupes. Low fuel prices will extend this trend. Auto loans may be harder to get as default rates on these loans increase.

The Moody’s analysis does not include two other important factors. Car sales have been so robust recently that much of the driving population has relatively new cars. That is compounded by the fact that cars last much longer.

The car industry, so strong in the years since the Great Recession, has lost a great deal of its luster.

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