US auto market enters the New Normal

US autos Dec10.pngUS auto sales have slowed again. We seem certain to end 2010 at the bottom end of last year’s forecasts for demand, which ranged between 11.5m – 12.5m. This seems the main conclusion from analysing November’s sales figures.
The blog has developed the new presentation above, showing sales by month since 2005, to assist comparison between years, given the strong seasonal bias to sales. Plus, of course, the sharp decline in Q4 2008, and the subsequent stimulus programmes, have greatly distorted normal year-on-year comparisons.
Two key conclusions can be drawn:
• Sales have stabilised since Q4 2008, but there has been no real recovery. Between 2005-7, only January ever saw monthly sales below 1.1m. But since 2009, only August 2009’s $3bn ‘cash for clunkers’ took them above this level.
• 2010 (orange line) has seen better volumes overall compared to 2009 (light blue). But 2008 (purple) marked a clear dividing line: H1 was in the 2005-7 sales pattern, but H2 began the new pattern seen since then.
Overall, total sales in 2010 will be ~11.5m. This will clearly be better than 2009’s 10.4m. But 2009 was the worst year for US auto sales since 1982.
Overall, it means the value of chemical sales into this critical market (using the ACC’s estimate of $2973/auto) will have been only $34bn, versus the $50bn seen between 2005-7. It seems the New Normal has arrived in the US auto market.

4 thoughts on “US auto market enters the New Normal”

  1. Pierpaolo Ferluga

    Dear Paul
    you have a great blog and I read it always.
    however if I can suggest you a potential improvement, it’s quite evident to the reader that you use to filter news and data in order to support your own theory: market is not promising, there are signs of crisis everywhere.
    This Paul mind, at the end of a spectacular 2010 and a very promising 2011 sounds a little bit confusing to a reader.
    from a different corner, I’m personally worried by the booming economy that is creating inflation and increasing all chemical prices month after month.
    if this is due mainly to China or if this is going to end in 2011 into a new crisis, I don’t know. however the main concern at the moment is about a tight chemical market and high commodity prices, from crude oil on.
    and I don’t see any tentative of explanation or analysis of that in your blog.
    Sorry Pail, as usual, I’m quite direct.

  2. Pierpaolo
    Many thanks for your comments, much appreciated as always.
    All I would say in response is that the blog aims to look out 12 – 18 months, rather than focusing on today. Thus a year ago, it was very optimistic about the outlook for 2010, at a time when most people were negative. And it maintained that positive outlook through H1 this year, as well as suggesting in early November that we would see a strong end to the year, . So I am not negative for the sake of it now. Also, what I am really trying to argue, as in this post, is that we are not going back to the Boom days of 2003-7, but towards a New Normal, and I see lots of positive things to look forward to in this environment. I’ll be writing more about this in the next White Paper, which is scheduled for publication in early January.

  3. Global chemical operating rates stay at 85%

    October is usually a seasonally strong month for chemical production. Factories are back from the summer holidays, and working flat out to meet orders before the Christmas and Lunar New Year breaks. So it is a bit disappointing that, as…

  4. I’m curious if there isn’t a “value disconnect” in the overall automobile inventory & market. The recent depression has many lots jam-packed with high-end autos that few can afford. Many new cars went unsold during this period, such that these become “old new cars”. Not sure if the data confirms this. I guess the banks & dealers can carry this huge inventory. How many hundreds of square miles of parked cars nationwide have to accumulate before this market gets real? I sense a correction is overdue, just like in residential real estate (mid-course), commercial real estate (mounting), and government pensions (coming).

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