OUTLOOK ’11: US auto sales poised to rebound, boosting plastics

30 December 2010 16:20  [Source: ICIS news]

By John Dietrich

HOUSTON (ICIS)--US automobile sales are expected to continue their bounce-back from recession-fuelled lows and several plastics are expected to gain market share in the production of lighter-weight automobiles.

With fuel economy and gas mileage the major driving factors for new models, the industry is seeking to make vehicles lighter. This should allow for several plastics to take market share from metals and heavier materials in automobile production.

“Fuel mileage standards and other regulations are creating demand for composites and plastics in cars,” said Plante & Moran partner Jeff Mengel.

Pressure from consumers for vehicles that get better gas mileage, therefore lowering their bill at the pump, also could help plastics and composites gain market share from metals.

“The price of gasoline has a bigger effect on fuel economy than any government regulation,” Mengel said.

Specifically, polypropylene (PP) could see more use in automobile production for interior use, while nylon and polyester could see increased usage under the hood because of their good heat resistance, Mengel said.

One area of the car that is not expected to turn to the chemical industry, however, is the windshield.

“Chemicals will probably never get the windshield because the windshield takes a pounding,” Mengel said.

The US automobile industry is a major downstream consumer for chemicals such as acrylonitrile-butadiene-styrene (ABS), styrene-butadiene rubber (SBR) and several other synthetic fibres, paints and coatings. The American Chemistry Council (ACC) estimates that each automobile contains an average of $2,700 (€2,052 ) worth of chemicals.

With increased sales from the US automobile segment expected, the chemical industry should see increased profits from higher sales.

For 2011, US automobile sales were expected to reach 12.8m units, according to IHS Global Insight, up from an estimated 11.5m units in 2010. Year-to-date sales for 2010 are at 10.4m units, according to Motor Intelligence data released in December.

Even if sales do not return to pre-recession levels - which they were not expected to do until 2015 - the auto industry has improved its margins and should remain healthy in 2011.

“Even at low level of sales, the industry is profitable for the first time in a while,” said George Magliano, IHS’ director of automotive industry research for North America. “The industry is looking much healthier.”

According to Magliano, the biggest reason for the increase in sales is the improving US economy and consumer confidence.

“We expect the consumer will continue to be comfortable buying and replenishing big-ticket items,” Magliano said.

Improved credit availabilty for large companies and consumers also should help the industry in 2011.

Magliano said 2010 and 2011 are the first steps in the industry’s recovery period from the recession, and that sales should return to all-time peak levels of 17m units sold by 2015.

($1 = €0.76)

To learn more about ABS, SBR or polypropylene visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: John Dietrich

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