US Sept auto sales rise, but headwinds persist from higher interest rates, economic slowdown
HOUSTON (ICIS)–US September sales of new light vehicles rose from the previous month and are up by double digits year on year, but higher interest rates and waning economic fundamentals are eroding consumer purchasing plans.
ICIS senior economist Kevin Swift said the increase is likely because of improved semiconductor supply and easing of other supply-chain challenges but noted that rising interest rates following the US Federal Reserve’s tightening of monetary policy amid efforts to stem inflation will continue to create headwinds for the industry.
September data from the Bureau of Economic Analysis (BEA) showed sales up by 2.9% from the previous month and by almost 14% from the same month a year ago.
US automaker General Motors (GM) said on Monday that the increase was because of continued strong consumer demand and improved availability.
The company reported its sales in the third quarter surged by 24% compared with the same quarter a year ago.
GM said it sold 14,709 units of its electric vehicles (EVs) in the quarter and plans to increase its calendar-year production for global markets from about 44,000 vehicles in 2022 to more than 70,000 in 2023.
The automaker said it also saw significant improvement in inventories on dealer lots, rising by almost 45% from the previous quarter and by almost three times the inventory available at the end of Q3 2021, when COVID-19-related supply chain issues were weighing heavily on production.
Low inventory levels have been one of the main factors in reduced sales, according to the National Automobile Dealers Association (NADA).
The global shortage of semiconductors has been one of the main impediments to the industry and has lingered much longer than industry executives and analysts anticipated.
Semiconductor chips are vital to production of modern vehicles as they control everything from the engine, antilock brakes, power steering, fuel monitoring system and heating and air conditioning.
While industry participants have said they are seeing better availability of the chips, the Semiconductor Industry Association (SIA) said on Monday that global sales in August rose by 0.1% from the same month a year ago but were down by 3.4% from the previous month.
Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represent a three-month moving average.
“Global semiconductor sales growth has stalled in recent months, and month-to-month sales decreased in August by the largest percentage since February 2019,” said John Neuffer, SIA president and CEO. “Sales into Europe paced all regional markets, while sales into China saw the sharpest declines.”
Regionally, month-to-month sales increased in Europe (1.5%), but decreased in Japan (-1.4%), the Americas (-2.8%), Asia-Pacific/All Other (-4.3%) and China (-4.9%).
Year-to-year sales increased in Europe (14.9%), the Americas (11.5%), Japan (7.8%), but decreased in Asia-Pacific/All Other (-2.9%) and China (-10.0%).
However, the WSTS is expecting sales to improve moving forward, projecting growth of 4.6% in 2023, driven by mid-single digit growth in nearly all categories.
The US government passed the $52bn CHIPS and Science Act of 2022 in July to help boost domestic production.
US chipmaker Micron Technology announced on Tuesday plans to invest up to $100bn over the next 20 years to build the largest semiconductor fabrication facility in the US in upstate New York.
AUTO INDUSTRY AND
This sector is important to the chemical industry because a typical vehicle contains nearly $3,950 of chemistry (chemical products and chemical processing).
Included, for example, are antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tires and hoses, upholstery fibers, coatings and adhesives.
Virtually every component of a light vehicle, from the front bumper to the rear taillights features some chemistry.
The latest data indicate that polymer use is about 437 pounds per vehicle.
Polymers used in automobiles include polypropylene (PP), polyurethanes, nylon, acrylonitrile-butadiene-styrene (ABS), styrene acrylonitrile (SAN), polycarbonate (PC) and styrene butadiene rubber (SBR).
Focus article by Adam Yanelli
Visit the ICIS automotive topic page.
Thumbnail shows an automobile. Image by Shutterstock.
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