US auto sales slip in May as prices rise

US autosa Jun11.pngHigher auto prices are slowing US demand. As the chart shows, sales in May (red line) were back below the 1.1 million monthly level again. This used to be a minimum in the pre-2008 period. Now, with just a few exceptions, it seems to have become a maximum.

Of course, the rise in May’s average price to a record $29,817 will help chemical companies. They need to pass through Q1′s feedstock cost increases, if margins are to be preserved.

The continuing shift to smaller, more fuel-efficient vehicles will also help boost demand for plastics and other products. The move to a New Normal is clearly now underway, with Ford, for example, reporting that sales of these were now 27% of total volume, versus 19% in 2010.

But worryingly for short-term volumes, we are likely to see a slow summer period. Unemployment is rising again. Japan’s problems are still reducing component supplies, with Toyota not expecting a return to full production before November. Whilst GM noted that price increases meant “consumers clearly sat on their hands”.

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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