US May auto sales tick higher from April, but macroeconomic stressors weigh on demand

HOUSTON (ICIS)–US May auto sales ticked higher from the previous month and are up year on year on a seasonally adjusted annual rate (SAAR), but demand continues to face headwinds from widespread staff reductions and companies scaling back procurement.

Jincy Varghese, ICIS demand analyst, said the macroeconomic stressors continue to weigh on demand.

Varghese said the impact of uncertainty surrounding the 2024 US presidential election on consumer sentiment is another challenge facing the industry.

But sales continue to trend higher, which is important to the chemicals industry as the auto sector is a large end-use for chems.

Light vehicle sales were at a 15.9-million-unit pace in May, with gains primarily from domestic sales as sales of foreign vehicles softened, according to Kevin Swift, senior economist for global chemicals at ICIS.

Swift said the month-on-month increase was the second in a row after a mixed pattern over the past few quarters.

The increase was not necessarily a surprise to market participants as May is typically a high-volume sales month, according to Patrick Manzi, chief economist for the National Automobile Dealers Association (NADA).

Vehicle sales and leasing data analysts Motor Intelligence estimated that seasonally adjusted, annualized rate of sales was 16.08 million, the first time it has topped 16 million since July 2023.

MICROCHIP SALES SURGE IN Q1
Global sales of semiconductors surged in Q1, according to the Semiconductor Industry Association (SIA), including a 26% increase in the America.

Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.

A shortage of microchips in 2022 hit the US auto industry hard, with production falling to just less than a 13-million-unit pace.

Semiconductors are used in modern vehicles to control everything from the engine, antilock brakes, power steering, fuel monitoring system and heating and air conditioning.

The US government enacted the CHIPS and Science Act in 2022, which has led to a boost in domestic production.

The SIA said in a recent report produced with the Boston Consulting Group (BCG) that projects the US will triple its domestic semiconductor manufacturing capacity by 2032.

The report also predicts that the US will grow its share of advanced logic manufacturing to 28% of global capacity by 2032.

CHEMS USED IN AUTOS
Demand for chemicals in auto production come from, for example, antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tires and hoses, upholstery fibers, coatings and adhesives, Swift said.

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 423b (192kg) per vehicle.

Meanwhile, electric vehicles (EVs) and associated battery markets are an important growth opportunity for the chemical industry, with chemical producers separately developing battery materials, as well as specialty polymers and adhesives for EVs.

Focus article by Adam Yanelli

Please also visit the ICIS topic page Automotive: Impact on Chemicals