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Europe’s Green Deal will transform its economy, as floods confirm urgency of tackling climate change

The floods raging in Germany and Benelux highlight the scale of the Climate Change challenge ahead.  Last week, Europe announced its roadmap towards a Net Zero economy.  It emphasised that achieving Net Zero, even by 2050, will be impossible if we don’t start now. As the Commission noted in presenting the strategy: “Climate change is

The post Europe’s Green Deal will transform its economy, as floods confirm urgency of tackling climate change appeared first on Chemicals and the Economy.

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Oil markets enter the endgame as car companies rush to electrify

Almost every day now sees a car company rushing to announce its plans to boost Electric Vehicle (EV) output. And key OPEC members – such as the UAE – are starting to recognise they have only a few years left to sell their oil, before the market disappears. Last May, the influential International Energy Agency

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“When all the experts and forecasts agree — something else is going to happen”, Bob Farrell

At the beginning of the year, “everyone knew” that inflation was about to take off, and that the US$ was going to collapse. Last week, the great Bob Farrell’s Rule No 9 proved its worth, yet again. US interest rates fell sharply and the US$ bottomed for this cycle. The two charts above tell the

The post “When all the experts and forecasts agree — something else is going to happen”, Bob Farrell appeared first on Chemicals and the Economy.

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Supply chains set to transform as companies start to reshore

Major new opportunities are starting to appear in today’s New Normal world, as I describe in a new analysis for the Institution of Chemical Engineers. Please click here to read the full article. We are set to enter a “New Normal” world as economies slowly reopen again with the arrival of Covid-19 vaccines. This will

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Pandemic leads to ‘baby bust’ as births decline in most countries

A year ago, many were suggesting the lockdowns might produce a “baby boom” as couples spent more time together. But early data suggests the world is instead seeing a “baby bust”. As Nikkei Asia reports: “Births (in December/January) have fallen between 10% and 20% in such countries as Japan, France and Spain — and even

The post Pandemic leads to ‘baby bust’ as births decline in most countries appeared first on Chemicals and the Economy.

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Americans hunker down on spending as the pandemic’s impact continues

US stock markets have been hitting new records recently, as investors swoon over the likelihood that the $1400 stimulus payments will power a major surge in consumer spending. But unfortunately, the facts show this is most unlikely. The chart from the New York Federal Reserve measures consumers’ intentions with regards to the 3 stimulus cheques

The post Americans hunker down on spending as the pandemic’s impact continues appeared first on Chemicals and the Economy.

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Rising US interest rates, US$ and oil prices set to pressure financial markets

Everyone who has ever played the Beer Distribution Game on a training course knows what is happening in supply chains today. A small increase in underlying demand is rapidly leading to a massive increase in ‘apparent demand’. As the New York Times reports, “the pandemic has disrupted every stage of the (supply chain) journey.”  And

The post Rising US interest rates, US$ and oil prices set to pressure financial markets appeared first on Chemicals and the Economy.

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Weak demand – and the illusion of a return to “normal”

My new interview with Real Vision focuses on the major changes underway in the economy. Our analysis of the chemical industry, auto market, and technology sector, suggests a return to the “old normal” is highly unlikely. Instead, major changes are underway in Demand Patterns, Reshoring, Energy Abundance, the Circular Economy and in Advanced Manufacturing.  For

The post Weak demand – and the illusion of a return to “normal” appeared first on Chemicals and the Economy.

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Look for Winners and Losers in 2021

“There are decades where nothing happens; and there are weeks where decades happen”. Lenin’s famous insight was highly relevant to 2020. It was full of such weeks as the coronavirus pandemic became a catalyst for major paradigm shifts in the economy. Of course, some sceptics still expect a quick V-shaped return to ‘business as usual’,

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Businesses face “biggest imposition of red tape in 50 years” as Brexit begins

Most companies had closed when the new EU-UK Trade and Cooperation Agreement (TCA) was finally announced on Christmas Eve. And they are only now starting to get their heads around what it all means. Essentially, it creates the biggest shake-up to the UK’s trading relationships since 1973.  As the BBC’s Economics Editor reported: “It is

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US chemical companies face ‘wake-up call’ as Biden focuses on the Climate Change agenda

I worked for many years at a world-leading chemical company, ICI. But sadly, it lost its way as senior management began to focus more on financial metrics than market developments. In 2007, it disappeared. Today, other companies including the once-mighty ExxonMobil risk making similar mistakes: EM was the world’s most valuable company just 9 years ago It 

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OPEC set to lose out as Biden, EU and China focus on Climate Change opportunities

OPEC used to dominate global oil markets. In the early 1980s, there was even talk of another OPEC cartel to control gas prices. But those days are long gone.  Instead OPEC members such as the UAE are increasingly aware they have only a limited time left to monetise their vast reserves of fossil fuels. This is

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Plastics producers face a ‘wake-up call’ from both ends of the value chain

Plastics producers have had a great run over the past 60 years, as demand took off for their products. But now globalisation is being replaced by sustainability, and they risk being left with an out-of-date business model, and falling revenues. Upstream, refinery closures are gathering pace as electric vehicle sales accelerate Downstream, brand owners and

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Welcome to the New Normal – a look ahead to 2030

10 years ago, I took a look ahead at what we could expect in the next decade, as discussed last week. Unfortunately, we now face the major economic and social crises that the chart predicted, if policymakers continued with ‘business as usual’. This week, I want to look ahead at what we can expect to

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If you don’t want to know the future, look away now

Next week, I will publish my annual Budget Outlook, covering the 2021-2023 period. It will highlight how the pandemic is accelerating major paradigm shifts in society, politics and the global economy. I have been publishing these Outlooks since 2007, and they disprove the idea that forecasting is a waste of time.  They highlight instead most

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Chemical industry has key role in helping to create a more sustainable world

The chemical industry has a critical role to play in enabling the world to “build back better” after the pandemic. That is the conclusion of the World Economic Forum’s Chemical and Advanced Materials Industry Action Group, for which I had the privilege of acting as an Expert Adviser. Its conclusions are as follows: “Where next?

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The New Normal for global industry

The global chemical industry is the third largest sector in the world behind agriculture and energy, and its outputs find their way into everything we consume. Paul Hodges, chairman of the pH Report, analyzes the chemical industry to give a unique perspective on the global economy to investors and corporations. In this timely discussion, he

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Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 102-year old Hertz rental company from filing for Chapter 11 bankruptcy protection for its US business on Friday night. Sadly, Hertz won’t be the only casualty. Its collapse instead marks the moment when the problems created by two

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“They may ring their bells now, before long they will be wringing their hands”

The wisdom of Sir Robert Walpole, the UK’s first premier, seems the only possible response to this weekend’s headline from the Wall Street Journal. How can a National Emergency ever be the basis for a major rise in stock markets? Of course, we all know that stock markets have become addicted to stimulus. But the

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Chain’s smartphone and auto sales tumble as coronavirus hits demand

China is the world’s largest market for smartphones and autos – responsible for c30% of global sales for both.  Yet as Reuters notes: “Most western policymakers and journalists view the world economy through a framework that is 10-15 years out of date, failing to account fully for the enormous shift in activity towards China and

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China’s lockdown makes global debt crisis now almost certain

Beijing has a population of 21.5 million, but you wouldn’t know it from this BBC video from last Thursday.  Normally busy streets and transport systems are eerily empty, with food deliveries often the main traffic on the roads. It’s the same picture in industry, with the Baidu Migration Index reporting only 26% of migrant workers

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Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomberg  Less than a third of China’s 31,000 auto dealers were profitable in the first half of 2019, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Auto markets in the Bric countries are

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Contingency planning is essential in 2020 as “synchronised slowdown” continues

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I forecast here a year ago. Its analysis also confirms the importance of the issues highlighted then, including “rising trade barriers and increasing geopolitical tensions”, a sharp decline in manufacturing, contraction in the auto industry and structural forces such

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Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’s logic shows us the way forward on the greatest challenge that we face today, of achieving climate neutrality by 2050. As the President of the European Petrochemical Association, Marc Schuller, highlighted last month when issuing a ‘call to action’: “The

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Markets face major paradigm shifts as recession approaches

Major paradigm shifts are occurring in the global economy, as I describe in a new analysis for ICIS Chemical Business Over the past 25 years, the budget process has tended to assume that the external environment will be relatively stable. 2008 was a shock at the time, of course, but many have now forgotten the

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Auto markets set for major disruption as Electric Vehicle sales reach tipping point

Major disruption is starting to occur in the world’s largest manufacturing industry.  Hundreds of thousands of jobs will likely be lost in the next few years in auto manufacturing and its supply chains, as consumers move over to Electric Vehicles (EVs). As the chart from Idaho National Laboratory confirms, EVs have relatively few parts –

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Europe’s auto sector suffers as Dieselgate and China’s downturn hit sales

Trade wars, Dieselgate and recession risk are having a major impact on the European auto industry, as I describe in my new video interview with ICIS Chemical Business deputy editor, Will Beacham. One key pressure point is created by the downturn in China’s auto industry. As the chart shows, it has been a fabulous growth

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The End of “Business as Usual”

In my interview for Real Vision earlier this month, (where the world’s most successful investors share their thoughts on the markets and the biggest investment themes), I look at what data from the global chemical industry is telling us about the outlook for the global economy and suggest it could be set for a downturn. “We look at

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BASF’s second profit warning highlights scale of the downturn now underway

The chemical industry is easily the best leading indicator for the global economy.  And thanks to Kevin Swift and his team at the American Chemistry Council, we already have data showing developments up to October, as the chart shows. It confirms that consensus hopes for a “synchronised global recovery” at the beginning of the year

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Budgeting for the end of “Business as Usual”

Companies and investors are starting to finalise their plans for the coming year.  Many are assuming that the global economy will grow by 3% – 3.5%, and are setting targets on the basis of “business as usual”.  This has been a reasonable assumption for the past 25 years, as the chart confirms for the US economy:

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Hurricane Harvey will turbocharge move to the circular economy

300,000 homes and half a million cars have been destroyed by Hurricane Harvey.  And in terms of business, it is often forgotten that Houston is home to more Fortune 500 companies than any other metro area than New York.  The damage will take years to repair, as families have to regroup and re-establish their lives […]

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Hurricane Harvey: lack of insurance will hit Houston’s recovery

“By Monday, the third straight day of flooding, the aftermath of Hurricane Harvey had left much of the region underwater, and the city of Houston looked like a sea dotted by small islands.  ’This event is unprecedented,’ the National Weather Service tweeted. ‘All impacts are unknown and beyond anything experienced.’” This summary from the New […]

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China’s used cars put a dent in global industry

China is now developing a used car market for the first time in its history.  This means the end of global auto sales growth, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog China’s car market has been key to the recovery in global auto sales growth since […]

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EU auto sales boosted by self-registration of unsold cars

The global auto market is currently dominated by China, where sales have more than trebled over the past 10 years. But the other 6 major markets have not always done so well.  Their total sales are up just 4.3% since they peaked before the Crisis began in 2007. As the chart, showing January – August sales since […]

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Auto sales confirm critical flaws in the BRIC concept

, It is 15 years since Goldman Sachs coined the word BRIC to highlight their argument that growth in the global economy would, in future, be led by the major emerging economies rather than the developed world.  The core concept was that China and India would become the dominant suppliers of manufactured goods and services, whilst Brazil […]

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China’s slowdown continues as Xi “takes the pain” of reform

“What a difference a day makes“. Dinah Washington’s famous song could well be applied, with a longer timescale, to developments in China’s economy. The shape of the above chart has changed completely since it was last featured here in January 2015, as volatility has increased in China’s economy.  It shows the relationship between bank lending and […]

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Auto sales and the oil price: the Great Unwinding continues

Serious questions need to be asked about the likely level of future demand growth for oil and auto sales in Emerging Markets (EMs), as I describe in my latest post for the Financial Times, published on the BeyondBrics blog  Oil market volatility has reached near-record levels in H1 this year, as the first chart shows. […]

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Americans drive less as auto market demand patterns change

34m Americans will be driving at least 50 miles this Memorial Day weekend, which marks the start of the summer ”driving season”.  But contrary to popular belief, the average American is driving less these days. The total number of miles driven is still increasing due to the rising US population.  But on an individual basis, people are driving 6% less […]

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India’s car market plateaus as motorbike sales dominate

Motorbikes continue to dominate India’s motor vehicle market, as the chart above shows based on new data from the industry association (India’s year runs from April – March): 16.5m 2-wheelers were sold in the year, up 2% versus 2014-15, and took 2/3rds of the market 2.8m passenger cars were also sold, with volume up 7%, and had a 12% […]

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Brazil’s PE market shifts from import to export as recession bites

4 years ago, Brazil’s polyethylene market flagged up the first warning signs that its GDP was hitting headwinds, as China’s stimulus programme begin to slow.  Today, sadly, the economy is in major recesssion, with the impeachment process against President Rousseff adding further pressure: World Bank data shows GDP fell 3.7% last year: they forecast “only” […]

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BRIC auto sales stall as Brazil and Russia recessions worsen

Clouds are gathering over the auto industry, as the impact of the post-2008 stimulus programmes fades into history. It is hard to believe that back in 2013, only 3 years ago, analysts were confidently predicting that Russia would have become the world’s 5th largest market by 2020.  And they were similarly forecasting great things for Brazil, which […]

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US auto sales head towards price war as subprime loans rise

The warnings keep coming about the underlying health of the US auto market.  But, as with the subprime housing crisis, nobody wants to listen: Last October, the US Comptroller of the Currency warned that some activity “in auto loans reminds me of what happened in mortgage-backed securities in the run-up to the crisis“ Yet auto […]

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Auto sales slump in Japan, Brazil and Russia as China slows

China’s slowdown is continuing to reverberate around the world.  One way of measuring this is to look at auto sales in countries closely linked to China’s market such as Japan, Russia and Brazil.  As the chart shows, they did well during China’s stimulus period, but they are struggling now.  By comparison, more self-sufficient India has […]

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Global car sales growth stalls without China

Where would the global auto industry be without the Chinese market?  Without China, sales in the Top 6 markets stalled last year, and were down 100k. And what will happen now China’s economy is slowing, and it is also starting to develop a large used car market for the first time?  Buyers will then have […]

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China’s car market: triple shock ahead

Auto manufacturers, their suppliers and investors need to prepare themselves for a triple shock from China’s slowing economy, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog The first shock is already under way. As the chart shows, China’s slowdown has caused passenger car volumes to decline in the Bric economies – […]

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China’s auto slowdown to push spare capacity into export markets

Where would the world’s auto industry, and its suppliers, have been without China in recent years?  And how will they manage now China’s demand for new cars is slowing fast?  These are the question troubling companies and investors as Q3 sales are analysed. The chart above shows the recent history of sales in the Top […]

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Auto sales downturn begins, as Top 7 markets plateau

Slowly but surely, it is becoming clear that the world’s auto market has reached its ‘peak car‘ moment.  One key piece of evidence is the above chart, which slows how volume growth has now plateaued in the Top 7 markets, as the Great Unwinding of policymaker stimulus continues: It shows the 12 month moving average […]

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“If the lips are gone, the teeth will be cold”: China’s New Normal policies require companies to undertake radical strategy reviews

Wishful thinking can be terribly dangerous for company profits.  Taken to extremes, it can lead them into bankruptcy. Recent developments in China thus make it essential for every company to immediately review its strategy for doing business in/with the country, against a realistic outlook for 2016-2018 GDP growth will likely be zero, and could well […]

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GM says owning a car in a city “is the last thing you should do”

Something strange is happening in the European auto market, as the above chart from the industry association shows: Normally there are seasonal patterns, with March seeing the highest sales of the year But the trend of increase or decline is normally fairly stable in either direction This year, however, both March and now June have […]

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H1 auto sales fall 2% in Top 7 markets, as BRIJ sales drop 15%

Hi data for auto sales in world’s top 7 markets is confirming my suggestion last October that global auto sales had reached their “top of the mountain moment“.  Total volume was down 2.1% versus 2014, with sales in Russia and Brazil showing major downturns.  As the chart shows, the sales decline is focused on the […]

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Yellen offers hostage to fortune on US growth

Previous chairs of the US Federal Reserve had a poor record when it came to forecasting key events: Alan Greenspan, at the peak of the subprime housing bubble in 2005, published a detailed analysis that emphasised how house prices had never declined on a national basis Ben Bernanke, at the start of the financial crisis […]

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China’s auto prices tumble as sales fall 3% in June

Its not a good time to be selling new cars in China.  As the chart shows: Sales fell 2% in Q2 (red line) versus 2014 (green), with June down 3.4% This is the first time sales have fallen in a quarter since Q1 2011 (pink) China’s auto dealer association said customer visits to dealers “dropped […]

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China’s new car market goes ex-growth as used car sales take off

My latest post for the Financial Times, published on the BeyondBrics blog is below |Jun 30 17:45 By Paul Hodges of International eChem Major structural change is under way in China’s passenger car market. New car sales grew just 1.2 per cent in May, as the country develops a used car market for the first time in its history. […]

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London follows Paris with city-wide electric vehicles and car sharing

Greek auto sales have been racing ahead in recent weeks.  They are up 16% so far this year, as people seek ways to protect their money in the event of Greece leaving the euro.  April saw the strongest rise, with sales up an astonishing 47% versus 2014.  As The Telegraph noted: “People living in a […]

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China auto sales rise just 1% as New Normal slowdown bites

The above chart was my Chart of the Year last December, under the title “China’s auto sales bubble begins to burst‘.  So it seems only sensible to update developments 6 months later. The key question, of course, is whether my headline was right?  Could it be that China was not going to deliver endless growth […]

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Average US auto loan term hits record 68 months in May

May was “another fantastic month for US auto sales”.  Or, it took the industry “one month closer to an inevitable downturn”.  All depends on which analyst you talk to: Ward’s Autos called May’s sales the best since July 2005 LMC Automotive suggested growth rates were slowing, and could possibly even contract next year It also depends […]

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Brazilian, Russian, Japanese auto markets continue to struggle

Bill White’s important critique of the policies being followed by his former central bank colleagues echoes his warnings before the 2008 Crisis.  One of his key points is that they have focused on manipulating the value of financial assets, ratehr than on developments in the real economy: “The price of financial assets, just think of Bunds […]

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India’s auto market remains dominated by motorbikes

4 years ago, India could do no wrong.  The ‘Incredible India’ campaign had captured imaginations around the world, and almost everyone seemed to believe that it was destined to become a major player in any market that it chose. Analysts were particularly excited about the potential for the auto market, with one major company suggesting: […]

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US auto sales close to running on empty

We’ve all had that moment of jumping into the car, and turning on the ignition, only to realise we forgot to fill up the fuel tank on the last journey. US auto sales data for April is flashing that same familiar orange warning light. From the outside, everything looked fine with the data.  Although there […]

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US GDP disappoints again as aging Boomers slow the economy

“Year after year we have had to explain from mid-year on why the global growth rate has been lower than predicted as little as two quarters back.” That was the comment, last August, from the new deputy chairman of the US Federal Reserve, Stanley Fischer.  This year, he won’t have to wait until mid-year to start the […]

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Q1 auto sales rise just 1.9% in world’s ‘Top 7′ markets

Its hard to be optimistic about the outlook for the global auto market.  The chart above of the Top 7 markets, which account for around 2/3rds of global sales, highlights the growing uncertainty.  It shows Q1 sales in 2015 (blue column) versus 2014 (blue).  Overall, these were up just 1.9% at 15.8m.  And although the […]

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BRIJ auto markets continue to struggle

Q1 showed little sign of improvement in the world’s second-tier auto markets – Brazil, Russia, India, Japan. In total, their sales used to equal those of the EU, the world’s 3rd largest market.  But Q1 volumes saw a 16% decline versus 2014 levels, as the chart shows: Japan’s sales were boosted in 2014 (blue column) by buying ahead […]

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China’s used car market set to drive future auto sales growth

China’s auto market is going through major change.  Tier 1 cities have imposed limits on car ownership, and car use by government officials is being severely restricted.  In addition, the lending bubble that drove major growth in recent years is coming to an end. Perhaps even more importantly for the medium term, a used car market is now developing […]

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Atlanta Fed Q1 GDP indicator at 0.2%, as US housing, auto sales remain below previous trends

US housing starts are slowing so far this year, with February’s starts just below the million level again on an annualised basis.  This follows the steadily declining rate of home ownership, which is now back at 1995′s level of 64%.  And yesterday’s Case-Shiller report on home prices suggests the 10-City Index may well have peaked back in […]

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Discounts support EU auto sales as Paris plans diesel car ban

A mild winter, combined with 20% price discounts, has kept EU auto sales in growth mode.  Latest data from ACEA shows January sales at 999k were the best for the month since 2011′s 1.042m.  The chart above shows the 12-month trend line since 2005, to avoid seasonal fluctuations with the monthly data (blue line): Sales were […]

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BMW says China’s auto sales are heading into a New Normal

Its amazing what a lending bubble can do in the short-term, as the above chart shows.  It updates my August post for the Financial Times, and highlights the astonishing rise in China’s bank lending since 2008 on the x-axis, and the remarkable rise in auto sales on the y-axis. Official data shows average disposable income last […]

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Chart of the Year – China’s auto sales bubble begins to burst

‘How China fooled the world’ was the subject of an excellent BBC documentary early in 2014 by senior editor, Robert Peston.  The BBC headline was as follows: “Now, Peston reveals what has actually happened inside China since the economic collapse in the west in 2008. It is a story of spending and investment on a scale never […]

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Global auto sales reach ‘top of the mountain’ moment

The best view is always from the top of the mountain.  And that seems where we are today in global auto markets.  They are on track for another record year.  And even better news is that sales have risen in each of the 5 major markets for the first time since 2007. The bad news is that […]

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Russian downturn causes GM, Ford U-turn; EU slows despite discounts

August is a holiday month for Europe’s statisticians.  So we had to wait until yesterday for a combined summary of July and August’s EU auto sales.  As the chart shows, they indicate a new slowdown is underway after the more encouraging volumes at the start of the year: Sales were up only 5.6% in July and 2.1% in August (red square), […]

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Auto sales on roller-coaster ride in Japan, Russia, Brazil, India

Car sales in Japan, Russia, Brazil and India currently account for just under 1 in 5 of global sales.  Their market share peaked at 21% in 2008, but is today back at 2005′s level of 17%.  As the chart shows, it has been a roller-coaster ride for all of them: Japan’s 4.7m sales were 10% of the global total […]

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China’s waning stimulus spells trouble for the world’s biggest car market

The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below. By Paul Hodges of International eChem China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead. The strong link between lending and passenger car sales […]

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GM focuses on low-cost autos, as European sales remain weak

Low growth and low-cost have become the dominant features of Europe’s auto market. Europe’s modest rise in auto sales continued in June, with volumes up 4.5% versus 2013.  But as the auto association reminds us, this “is the second lowest level in the month of June since reporting began in 2003“.  And the detail of the […]

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China condom sales droop 1 million/day on anti-graft campaign

Condom sales have dropped by 1 million/day in China according to The Economist magazine.  It highlights how: Across China, luxury retailers and fancy restaurants are suffering from an edict against wasteful government spending. A chill has crept into karaoke parlours and brothels; mistresses also face a hard time. The reason is the new leadership’s anti-corruption […]

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China auto market to focus on low-cost, not luxury

The key to forecasting China’s auto demand since 2008 has been the level of bank lending, as the chart above shows.  This was critical in making China the world’s largest auto market.  Official data shows average disposable income was just Rmb 10k ($1600) in H1 2014, making it impossible for most people to buy a car out of income: […]

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Global auto markets depend on China for growth

Global auto markets have started to move in new directions.  That much is clear from comment by the major national auto associations.  This will be a shock to manufacturers, who have over-expanded production.  Price wars and capacity cutbacks are inevitable if the industry forecasts are correct. The chart  starts from 2005, and shows the 7 major […]

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EU auto sales stagnate as unemployment remains near record

The good news about EU auto sales, as the chart shows, is that they have stabilised above last year’s record low levels: Sales in the January – May period were up 7% (red square) versus 2013 (green line) at 5.4 million Sales in May itself were up 5% versus 2013 at 1.1m Sales have risen […]

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China auto sales depend on lending and property bubble

The above chart is the blog’s simple guide to forecasting China’s auto sales.  We know from all the data that most Chinese are far too poor to afford to buy a car out of their income.  Average per capita consumer spending in the towns is just $2600/year, after all.  While rural incomes are only a […]

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Indian auto sales decline as the middle class myth disappears

India’s stock market has hit new records this week, as investors anticipate radical policy changes after election results are announced today.  And the chart above highlights a key area behind the need for change, namely the problems of the important auto market: Indian auto sales dipped in April to just 183k (red square) This is […]

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Global auto industry enters “peak car” era

Q1 saw record global auto sales volumes, as the chart above shows: US and EU manufacturers cut prices and offered great financing deals to boost sales Chinese buyers raced to beat new quota restrictions on the main cities Japanese consumers brought forward purchases ahead of April’s sales tax increase Only India disappointed of the 5 major markets, […]

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EU auto sales boosted by 25% discounts and financing deals

When is a car sale not a car sale?  That’s the question that has been bothering the blog in the past few weeks. Of course, it wants to cheer the news that EU auto sales have seemingly recovered.  But as the chart above shows, the recovery is still very limited: Q1 sales at 3.25m (red […]

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Price war looms in US auto market as incentives increase

The blog is awarding itself a pat on the back this morning, as its forecast last month for the US auto market seems to have proved more accurate than those of the experts. Under the heading ‘US automakers increase incentives as sales fail to boom’, it forecast: “The blog therefore suspects that March will be […]

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India’s car buyers remain cautious despite pre-election tax cut

Its pre-election time in India, as the world’s largest democracy prepares to go to the polls next month.  And so auto sales are receiving special attention from the politicians in advance of the vote. Thus the Finance Minister cut taxes last month on all models, to 8% from 12% for small cars, 2-wheelers and commercial vehicles; to […]

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US automakers increase incentives as sales fail to boom

This month is likely to be a very good time to buy a new car in the US.  The reason is that auto manufacturers had believed that a recovery in consumer spending and the economy had become inevitable.  Thus they had built inventories of new cars in anticipation of the sales rush. These are now […]

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Lanxess CEO departs as auto markets enter the New Normal

The blog, like most people, doesn’t like change.  Change creates uncertainty, and makes us all nervous.  Therefore in recent years, it has secretly hoped that its forecasts about the inevitability of the subprime crisis, and the arrival of the New Normal, would prove wrong.  Life would be so much easier if everything could simply continue as it […]

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European ethylene production at 1996 low

Nobody was expecting very much from Q4 ethylene production in Europe, as several plants had been taken offline in December due to lack of demand.  And yet it is still possible to be disappointed by the actual outcome as reported by APPE.  As the chart above shows: Q4 production at 4.4MT was the lowest since the […]

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Global auto industry sales growth depends on China

Autos remain the world’s largest manufacturing industry, and the single biggest source of demand for chemicals and plastics.  According to detailed analysis by the American Chemistry Council, each new US auto is worth $3,539 in terms of sales – and involves a wide range of products including antifreeze, plastic dashboards, bumpers and windows, as well as upholstery […]

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EU auto sales slide for 4th year in a row

Final data for EU auto sales has now been published, and is summarised in the chart above: Sales fell for the 4th year in a row in 2013 (red square) to 11.8 million This was a 2% fall versus 2012 (green line) and a cumulative 18% fall versus 2007′s peak Only 2 countries, the UK and Spain, […]

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US new car sales at highest level since 2007

The good news about US auto sales is in the chart above.  It shows: 2013 volumes at 15.6 million were the highest since 2007 (red square) This was a 7% increase versus 2012 levels (green line) Q4 sales at 3.8m were particularly strong, and were the highest since 2005 Unsurprisingly this has led many to believe that […]

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China auto sales jump to meet pollution quota deadline

China’s auto sales moved past Europe’s in 2010, and are now close to US levels.  But even China is not expected to maintain this surge in 2014.  As the chart above shows, sales soared in the past few months (red line) versus 2012 (green).  But as the automotive association explains, this was mainly because: “Panic consumption over […]

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Brazil, Russia, India car sales fall for first time in 10 years

Since 2009, the 4 BRIC nations (Brazil, Russia, India and China) have been the focus of every car manufacturers’ dreams.  Whilst the West worried about ageing populations and its financial crisis, the BRICs seemed to have moved into a new dimension. Today, however, reality is beginning to set in: Auto sales in Brazil (the world’s […]

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“The policy Kings/Queens have no clothes”

There seems almost no need to publish a forecast for 2014.  Policymakers have toured the TV studios to confirm that this is finally the year of recovery.  They admit it may have taken nearly 5 years longer than first expected, and that there have been numerous ‘false dawns’ on the way.  But now, they are certain that […]

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China auto sales could drop if lending squeeze continues

Imagine for a moment that you had become president or premier of China following the leadership transition in March.  You know that the country’s economic model has to change.  But you also know that you have to carefully develop your powerbase, whilst also putting in place new policies. Probably you would take things cautiously at […]

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BMW says “pay to use” models will challenge US auto industry

Major change seems underway in the auto industry, as BMW joins the list of those entering the car-sharing market with its DriveNow electric vehicles.  As BMW’s Tony Douglas noted at their launch: “Our core business in the ’70s was selling cars; in the ’80s, late ’70s came the great innovation of leasing and financing. Now […]

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US auto sales reward agility in spotting opportunities

We are now into the seasonally weaker selling part of the year for US auto markets, as the chart shows.  The big months for volume are always March – August, and then sales slow until December – when manufacturers offer ‘special deals’ to boost their annual numbers. On this basis, October seems to have been a […]

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India’s onion harvest boosts auto sales: Japan’s sales gently decline

The blog’s pre-Budget Outlook review of the major auto markets concludes today with Japan and India.  Together they are 10% of the global market.  But their development is an excellent example of how reality can overtake the wishful thinking of policymakers: Japan (red line) is the larger market.  It has lived through countless government stimulus […]

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US auto market driven by used car sales trends

September wasn’t such a good month for US auto sales, as the chart shows.  It was the first time since May 2011 that sales were below those of the same month in the previous year.  Was this just a blip, explained by the fact that August was strong due to Labor Day being very early in […]

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European auto markets head in a new direction

The European auto market continues at 20-year lows, with sales down 4% in January – September.  Whilst September’s sales appeared stronger, up 5% versus 2012, this was only due to Spain and the UK.  Spain boosted volume by 10k due to a €2.7k ($3.7k) government hand-out for people trading in an older vehicle.  Whilst UK volumes were up 40k due to a credit […]

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China’s auto sales rise as bank lending booms

Autos are now the largest single manufacturing industry in the world.  Not only do they directly and indirectly employ vast numbers of people, but they are also increasingly key to consumer spending.  Thus it is no surprise that governments have tried to increase auto sales since the Crisis began in 2008. China is the prime example of […]

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India’s auto industry “continues towards downwards path”

Car companies are normally optimistic.  You rarely hear them saying that things are saying that things are bad – they prefer instead to focus on how things are just about to get better.

This makes recent statements by India’s auto …

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China revises down H1 auto sales by 9%

China’s state media have published major revisions to reported auto sales data for H1, and for the equivalent period in 2012.  As far as the blog knows, these have not been noticed elsewhere, so it seems worth providing more detail …

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India’s auto sales fall for record 6th month

As the above chart shows, India’s auto sales have now fallen for the last 6 months versus the previous year. According to India’s auto association, this has never happened before (sales data was first collected in March 1998). This is another symptom…

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Extra selling days support EU April auto sales

Good news about EU auto sales is always welcome, especially when it comes after 17 months of declining sales. Thus the blog is happy to note that April’s sales rose 1.7% versus 2012. Equally, however, it has to report the commentary of Europe’s auto …

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US auto sales growth declines for 5th successive month

Blog readers read it here first. Last month the blog did some simple sums to show that US auto sales were unlikely to continue to grow at the 8.6% reported rate of Q1. The reason was that sales had been increased by the need to replace the 250k autos…

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India’s auto sales enter the New Normal

India is the 3rd largest Asian auto market after China and Japan, and a year ago its automobile association was confidently forecasting annual demand growth of 10%-12%. Instead, sales have fallen 7% (India uses an April-March year) – the first time an…

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Low-cost Dacia boosts sales 15%, as EU market declines 10%

One volume car manufacturer in Europe achieved a 15% volume increase in Q1 with one of its major brands. The same brand is also achieving margins of around 9%. Who was it?

Regular blog readers will know the answer. Renault’s low-cost Dacia was the …

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Licence plate trading drives Q1 jump in China’s auto sales

Something very strange happened in China’s auto market during Q1. As the chart shows, sales (red square) rocketed 20% in January/February versus 2012 (green line), before cooling to 15% growth in March. Neither government nor the auto industry expect…

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US auto sales growth slows as Hurricane Sandy impact ends

250,500 US autos were destroyed during Hurricane Sandy last November, according to official data from the National Insurance Crime Bureau. Their replacement was clearly going to have a big impact on auto sales for the following months. Yet strangely,…

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Auto sales start to plateau globally

Autos are the largest manufacturing business in the world, and are also the largest single source of demand for chemicals and plastics. So developments in the major markets are key to future economic growth and demand patterns.

The chart summarises d…

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EU auto sales continue their decline

There really isn’t very much to say about the latest EU auto sales data. They were simply awful. As the chart shows, 2013 volumes (red square) are well below 2012 levels (green line). Less than 800k cars were sold in the 2 months combined, down 10%….

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US auto sales growth slips as Hurricane Sandy impact ends

CNN captured the world’s imagination when launching 24/7 television coverage of the first Gulf War in 1991. For the first time in history, viewers were able to see what happening as it happened. And CNN used expert and experienced commentators to mak…

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EU auto sales fall again, as young people lose interest in cars

Europe’s auto association (ACEA) has joined India’s in worrying about likely future sales levels. As the chart shows, it reports volumes “reached a historic low for the month of January (red square)”. Even German sales were down 8.6% versus 2012. Wh…

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"Cheap, convenient mobility" the new trend for US auto markets

The US auto market seems to be at the start of a 3rd period of major change since 1950. As the chart above shows, sales have still not recovered to 1995-2007 levels. Equally, the key drivers behind the earlier two phases of development seem to be unw…

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Combined EU, US, China auto sales edge up 4% in 2012

Autos are now the largest single global market for chemical and polymer sales, after the slowdown in US and European housing. Each US auto is worth $3636 to the industry, according to American Chemistry Council data. Thus the US market was worth a re…

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US auto buyers prefer new to old, as used market tightens

December saw continued strong volume in US auto markets, with sales (red line) at pre-Crisis levels for the month. The key driver is the need to replace ageing vehicles, but manufacturers were also generous with rebates and credit offers to help clear…

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Global auto sales remain slow as China boosts exports

Auto sales continue to struggle in 3 of the world’s main markets. The chart shows combined sales by month in China, US, EU, Japan and India. These were 76% of global demand in 2011. Overall, volume is up 6% versus last year:

• China’s sales are …

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Auto sales growth stalls world-wide

Autos are easily the largest global demand sector for chemicals, now housing has declined. Developments in the world’s 4 major markets (China, US, EU, Japan) are thus critical to the future outlook, as they account for nearly 75% of total sales. As t…

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US auto market reaches a fork in the road

The US auto market is reaching a critical fork in the road. The consensus view believes that full recovery is well underway. They see the slowdown in October’s sales as purely being weather-related, due to the arrival of hurricane Sandy.

Clearly t…

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Global auto sales growth slows

The impact of sustained high oil prices is becoming very clear in global auto markets. Car sales are facing major headwinds with gasoline and diesel prices at, or near, record levels in many countries. The chart shows combined sales in the 3 major ma…

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China’s auto sales remain in the slow lane

Mark Twain, the famous US writer, put it well when he warned that:

“It isn’t what you don’t know that gets you into trouble. It’s what you think you know for sure.”

This has certainly been the case with auto sales in China. In 2010, leading analyst…

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India’s slowdown boosts motorbike sales

95% of Indian households do not own a car. And as the chart above shows, motor cycles remain the key market for manufacturers. 2011-12 annual figures have now been published, and they show:

• 70% of sales were motorbikes (light blue), versus 66% i…

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Nissan targets Datsun at the $3000 auto market

It would be nice to believe that there are billions of middle-class people in emerging countries. And even nicer to imagine they are just waiting for the chance to buy expensive Western goods. Sadly, the truth is more prosaic. 96% of China’s populat…

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EU auto sales down 7% versus 2011

Mario Draghi, new head of the European Central Bank (ECB), is extremely good at doing deals. He learnt his trade at Goldman Sachs, and then polished his skills whilst running the Bank of Italy. But unfortunately, deal-making skills are not enough to …

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US jobs, auto sales still below pre-Crisis levels

The above 2 charts show US jobs and car sales on a monthly basis, side by side. They cover the years 2008 – 12, and the combination provides a clear message about demand trends:

• The jobs total began to improve in 2011 (green line)
• They rose 2…

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China’s auto dealers cut prices as inventories rise

All is not well with China’s auto market. On the surface, as the chart shows, sales appear to have picked up after January’s poor performance:

• Q1 sales (red line) were flat versus 2011 (green)
• Q2 sales were up 12%, due to a strong May and Jun…

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Risks rise over China’s auto sales

The world’s 3 major auto markets – USA, Europe and China – currently account for ~70% of global sales. And as the chart above shows, H1 performance has been volatile over the 2005-11 period:

• 2005 was the last year of the US subprime boom, and the…

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China’s low-cost vehicle exports rise 43% in May

2 great myths are helping to destroy company profits as we transition to the New Normal:

• In the West, it is that ‘recovery is just around the corner’
• In emerging economies, that everyone is now ‘middle class’

Sadly, this latter claim makes no…

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EU auto sales fall 9% in May

Another month, and another downturn in the European car market.

It was the largest regional market in the world as recently as 2009, when 13.3m cars were sold But as the chart shows. May (red square) saw sales down 9% versus 2011 (green line). This…

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Average age of US auto fleet at record 11.1 years

US auto sales maintained a steady pace in May. As the chart shows (red square), they were 1.3m in the month, and are now up 13% versus 2011 (green line).

The key driver remains the need to replace old vehicles. It is impossible to work or shop in ma…

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EU auto sales fall again

April was another bad month for EU auto sales.

As the chart shows, based on ACEA data, sales were down 7% in April (red square) and down 8% versus 2011 (green line) in January – April.

The only bright spot remains Germany, were sales were up 2% in t…

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China’s demand growth remains weak

China’s demand growth continues to be weak down the main value chains.

Auto sales are the most obvious example. As the chart shows, they have recovered from the very slow period over the Lunar New Year holiday, but are still only up 2% (red diamond) …

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US, China, EU auto sales up just 1% in Q1

Autos are the largest single market for chemical and polymer sales. And the USA, China and EU are the 3 largest markets, accounting for 2/3rds of global sales last year.

Disappointingly, as the above chart shows, their sales were up just 1% overall…

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US auto buyers head for fuel efficiency

Every now and then, genuinely good news comes along in terms of consumer demand. Today is one of those days.

As the chart above shows, US auto sales in March (red square) were the highest monthly total since March 2007. They also followed relative…

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EU auto sales fall 10% in February

EU auto sales are back at early 2009 levels. This was the height of the slump that followed the start of the financial crisis. But today, unlike then, it seems unlikely that politicians can afford another €2500 ($3.25k) ‘cash for clunkers’ programm…

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China’s auto sales fall 5%

If something seems to be too good to be true, then it generally is. That appears to be the learning from China’s auto market in recent months.

February sales jumped, as the Lunar New Year holiday took place in January this year. But total sales in J…

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US oil markets at a turning point

An excellent new report from Citi’s commodities team suggests the US supply/demand balance for crude oil is undergoing fundamental change.

Importantly, they also argue that the concept of ‘peak oil is being buried’, and add:

“The belief that global…

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Auto sales have slow start in January

January was not a great month for auto sales in the 3 major markets of the USA, EU and China. These amount to over 50% of global auto sales, and are a key indicator of underlying consumer demand.

As the chart shows, sales were just 3m (red square), d…

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Global auto sales growth stalls as BabyBoomers age

Cars are now the largest single market for chemical sales, as housing markets have slowed globally. Each new US car is worth $3297, for example, according to the American Chemistry Council (ACC), making the US market worth $42bn in 2011.

2011 auto …

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US auto sales rise, as older cars have to be replaced

December’s US auto sales provide a classic example of Kahneman’s illusion, discussed on Saturday.

Initially they appear encouraging to our System 1 minds. As the chart shows (red line), they were the 2nd highest of the year, and one of the few months…

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Auto sales growth stalls in China, Europe and USA

November (red line) was a mixed month for auto sales, as the above chart shows. It updates the state of the world’s 3 largest markets:

• China remained the largest market with sales of 1.3m. Its Year To Date (YTD) sales are up 6% at 12.5m
• Euro…

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EU auto sales hit new lows

Autos are now the single biggest market for petchem sales. They are also reported very quickly. So October’s EU auto sales provide the best real-time picture of the downturn now underway. As the chart shows:

• October’s sales (red square) were th…

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China’s subsidy end boosts September’s auto sales

Auto sales in the key global markets of China, USA and Europe present a mixed picture as we look towards year-end (red square):

• China had a strong September, and sales are now up 6% versus 2010
• But the Auto Association claimed this was due to …

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US auto sales remain flat

The good news about US auto sales last month was that they were the highest September sales since 2007. The bad news was that they were still below the 1.1 million level, which was the minimum monthly sale from 2005 – August 2008.

The reasons for the …

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US, China, EU auto sales stall

Auto sales in the world’s 3 main markets (China, USA, EU), saw much slower growth in the past 3 months.

The chart above shows how they have moved in 2011 (red square) versus previous years. It is clear that the stimulus-led boom seen since 2009 has c…

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European auto sales down 1% so far in 2011

Most of Europe goes on holiday in August, and so it is only now that auto sales for July and August have been reported.

As the chart above shows, the monthly sales figures continued the weak trend seen so far this year (red square):

• July’s sales …

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China heads for 45% over-capacity in autos by 2013

China’s auto market growth has clearly stalled.

As the chart above shows, August figures (red square) continued the trend of recent months, and were only 5% above 2010 levels (brown line). Rao Da, head of China’s automotive association, also repeat…

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US auto sales continue to disappoint

One characteristic of recessions is that recovery is always ‘just around the corner’. We can see this pattern in today’s US auto market. Since 2009, forecasters have been convinced that sales will quickly return to Supercycle levels of 15-17 million/…

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Chrysler warns of China threat

Chrysler CEO, Sergio Marchionne, has issued a wake-up call to Western auto companies about the growth of China’s exports. He warns that they “can’t count on dramatic growth in Asia to drive prosperity”, and suggests that China’s plans to increase auto…

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China’s auto market goes ex-growth

China’s auto market has gone ex-growth, as the above chart shows. Monthly sales in July (red square) were the 2nd lowest since July 2010.

The problem is the continuing fall-out from the end of China’s great credit bubble. Inflation hit a new high of…