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.