Unemployment hits US auto sales in 2010

US autos Jan11.pngAs the chart shows, December’s US auto sales (orange line) were the highest monthly level since August 2009′s ‘cash for clunkers’. But it was only achieved via a massive 7% jump in purchase incentives, which were back at Q2 2009 levels of $2700/vehicle. And 2010 was still the second worst year for sales since 1982, after 2009, with total volume of just 11.6m.

The issue, of course, is that people don’t buy new autos if they are worried about losing their job. And sadly, Friday’s monthly jobless figures gave no sign that the job market is about to improve, with just 103k new jobs created. Overall, 14.5m Americans were unemployed, with another 6.5m not counted as jobless as they had given up looking for a job. As the Wall Street Journal notes:

8.4m jobs were shed during the recession, and in 2010 just 1.1m were added. At December’s pace, it would take 70 months–or until late 2016–to make up for the rest of the jobs lost.”

Thus it looks as though we may be looking at an 11 – 13m range for auto sales over the next couple of years. This would be well down on the 15 – 17m range seen between 1995 – 2007.

However, the mandated 40% increase in auto efficiency by 2016 will balance this decline. Replacing steel and glass is creating a need for more lightweight polymers and other materials, and the American Chemistry Council reported this week that average polymer demand rose to 384lbs (175kg)/vehicle in 2010.

In turn, this will hopefully provide good opportunities for many of the innovative chemical companies now supplying the sector.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. 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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