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Ford warns on auto sales

Economic growth
By Paul Hodges on 09-Jan-2008

US autos are one of the major uses for chemicals. The ACC recently calculated that each auto contains $2441 worth of chemistry, with a wide range of companies supplying products such as antifreeze, sealants, coatings and plastics. In 2006, chemical sales to the industry were worth $32.6bn.

A downturn in auto sales is therefore not good news. As I commented in November, when reviewing Q3 sales, ‘domestic US markets could get very difficult next year, if core auto and housing markets don’t start to recover soon’.

Unfortunately, Ford CEO Mulally’s comments last night suggests that they are not optimistic about 2008 prospects. ‘Clearly, most of the parameters of our economy are associated with a real slowdown’, said Mulally. ‘Everything has deteriorated more than we expected’.

We can also see this in the newly-released sales figures for 2007. Sales by the big 4 (GM, Toyota, Chrysler, Ford) were down 5% overall versus 2006 at 11.1m, with only Toyota showing a sales increase.

GM were down 6% in the year, with 3.9m sales
Toyota took the No 2 spot for the first time, with a 2.7% increase to 2.6m sales
Ford took No 3 spot for the first time since 1905, after a 12% decline to 2.57m sales
Chrysler, now under Cerberus management, and offering major cashbacks to clear inventory, was down 3% with 2.1m sales

The only positive was that inventories do seem to have been cleared, with Chrysler reporting the lowest level going into January for 13 years. But even this good news came at a cost for the chemical industry, as it was only due to a 21% production cut in December.