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North American Automotive Production

Januar 8, 2015

Despite lingering economic uncertainty in certain regions, the global automotive industry continues to gain momentum, making progress toward recovery to pre-recession sales levels. Numerous factors, including gas prices, consumer borrowing, and labor rates, will heavily influence production and sales growth in 2015 and beyond.

North American Light Vehicle Production hit a record high for October, bringing annual Production to 16.8 million units, up 4.8% from last year. Production is anticipated to close the year up 6.6% from 2013, and to continue to grow through 2016.

Automakers continue to see improved US sales, with annual Auto Retail Sales increasing 5.0% in the last 12 months to 16.4 million units. Demand for new vehicles is being driven by a plethora of factors including low interest rates, the oldest vehicle fleet on record, and a generally improving US economy. The recent decline in gasoline prices has also swung preferences toward trucks and SUVs.

Meanwhile, consumers are borrowing at an increasing rate. Borrowing for the purchase of motor vehicles climbed to $940.9 billion in the third quarter from $918.7 in the second quarter of the year. An improving job market is also providing Americans with the means to continue spending. The Non-Seasonally Adjusted Unemployment Rate fell to 5.5% in October, the lowest rate since May 2008. Average Hourly Earnings (Total Private Workforce) and Disposable Personal Incomes are also up 2.0% and 2.5%, respectively, from last year, providing impetus for further consumer spending on large purchases like vehicles.

Wholesale Trade of Motor Vehicle & Parts is accelerating in its rate of growth and annual Trade stands at a record $410.4 billion. Motor Vehicles Trade is growing at the fastest pace in over a year, and additional growth is probable given gains in Light Vehicle Retail Sales and Light Vehicle Production. Wholesale Trade of Motor Vehicles accounts for 16.7% of Wholesale Trade of Durable Goods, suggesting Motor Vehicle growth will support improvement in the sector as a whole into at least early 2015.

Annual US Car Inventory is at its highest level in over 12 years at 14.9 million units. Inventories surged in July in preparation for the lack of output stemming from auto plants closing to adjust equipment for the new model year and have slowed in their pace of growth since.

North America Automotive Production as a whole continues to be lifted by increasing Light Truck Production, which has risen 9.8% (annual basis). Passenger Car Production is recovering but remains 1.5% below the year-ago level. Expect that Truck Production will outperform Passenger Car Production in the coming months.

US Retail Sales at Automobile and Other Motor Vehicle Dealers is at an all-time high of $966.4 billion through November, an 8.4% increase over the year-earlier level. Record levels of consumer demand will support further Production gains in the US the coming months.

In Mexico, the importance of the automotive market continues to grow, with Mexico Light Vehicle Production topping 3.1 million units as manufacturers position themselves to benefit from cross-border, integrated production. A number of auto companies are increasing their investment commitment in the country. Ford Motor Co. recently announced the decision to shift plans for new, smaller engine plants from Windsor, Ontario in favor of a location in Mexico. Expect this trend to continue as low cost labor in Mexico attracts more manufacturers to the region. Export activity in this segment was weak in the first three quarters of 2014, but quarterly Mexico Export of Cars and Transport Vehicles are 3.6% above the year-ago level through October, suggesting annual exports will pick up in the near term.

Annual Mexican Passenger Car Production expanded from the year-ago level, up 2.7%, for the first time since September 2013, and internal indications suggest that further expansion is likely. Total Truck Production is up 12.5% over the same period but is easing it its pace of growth. Expect year-over-year expansion in both segments in the near term, but Passenger Car Production has more upside potential than Truck Production for 2015.

In Canada, Annual Light Vehicle Production has stayed virtually even with the year-ago level for the last 5 months. Quarterly Production is down 2.4% from the same 3-month period last year, suggesting further decline in annual Production in the coming months. Passenger Car Production is weighing on the market, down 5.2% from last year on an annual basis while Truck Production is up 3.9% over the same period. Annual Canada Auto Retail Sales are up 7.9% from last year through the third quarter and, if rise is sustainable, could drive increased Production or Imports in 2015.

Even with an optimistic outlook for automotive production and sales, the industry faces strong forces of change, including environmental regulations and evolving consumer preferences. In order to help you navigate the evolving automotive industry, IEWC has numerous solutions available to automotive assembly houses and OEMs. We offer a broad range of products that meet SAE, ISO, JASO and automotive OEM specifications, ensuring you have the correct product for your application, no matter the OEM platform. Extensive inventory of such products and our Customer Automated Replenishment System (CARS®) allows us to help you manage ebbs and flows in your demand. And with IEWC's 20 global locations, we can support, and even help transition, your requirements regardless of production location.

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