Deutsche Bank lowers US auto demand forecast

18 June 2008 18:19  [Source: ICIS news]

HOUSTON (ICIS news)--Deutsche Bank on Wednesday said it was lowering its demand forecast for US automobiles, which represent an important end market for chemicals and chemical-related products.

“At present, seven of eight leading indicators of US auto demand that we monitor suggest that recessionary levels of auto demand will continue. In addition to the traditional leading indicators that we watch, we have previously noted that falling residual values make itdifficult to execute transactions involving trade-ins,” the bank said in a research note distributed on Wednesday.

The automotive sector consumes engineering plastics, paints and coatings, and styrene-butadiene rubber (SBR), among other products.

“We are lowering our 2008 US light vehicle sales assumption to 14.5m from 14.9m previously. We are also lowering our demand forecast for 2009 and 2010 to 15.0m and 16.0m from 16.0m and 17.0m previously,” the report said.

It added: “Plugging higher gas prices into our econometric model, we believe auto demand will likely gravitate towards the 14.0m level for the near term.”

Soaring fuel prices, driven by an increase in the prices throughout the global energy complex, have begun to impact consumer preference for cars, the report said.

Car buyers in the US currently are seeking smaller vehicles while local manufacturers have comparatively higher inventories of larger autos such as pickups and sport utility vehicles (SUVs), Deutsche said.

 “In addition to weakening customer traffic, dealers report they are now suffering from a mismatch between what consumers want to buy (small cars), and what they have in inventory (pickups and SUVs),” the report said.

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By: John Waggoner
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