US auto sales catch subprime fallout

Two of the largest US auto manufacturers, GM and Ford, have now followed Wal-Mart and Tesco’s lead in detecting a change in consumer sentiment. GM, after announcing particularly strong Q2 Asian and emerging market sales, added that US sales declined 7% as a result of ‘increasing fuel prices and concerns about housing’. Ford said that their US sales had declined 19% in July, and talked of ‘sobering’ economic challenges.

This is bad news for chemicals demand, if it continues. 70% of US GDP is consumer-related. Housing and autos are two major components – if they continue to deteriorate, then we could be in for a sticky patch in Q4. Those CEO’s now working on the cost leadership programmes that I proposed in mid-July will not feel inclined to relax their preparations after this news.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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