The “China Slowdown” is running right behind the Europe morass and the U.S. fiscal cliff have been the big news for the US market. Now, August sees the China auto market rate of growth slow again, growing concern for automakers. Here are a couple of thoughts on the impact on global Auto OEMs:
The biggest concern I’ve heard is over Toyota’s two months of decline in the market; -15% for August after a -5% in July. Toyota says this is more a technical issue resulting form unseasonably big increased in July and August 2011 as it ramped local sales back up after the Japan crises. Both Toyota and local dealers dismissed suggestions that local pushback on Japan-China politics was not Continue reading →
China auto sales are in for the first half and they are slightly ahead of the consensus of 5% growth for the year. Overall PV sales are up 7.1% over last year, and again we see a two-tiered level of performance.
First-half growth was driven largely by a rebound on the Japanese brands after their hit from last year’s earthquake impact, and a push from luxury brands 2012 actions to move overbuilt inventory. Overall GM + the Japanese brands lead the increase while locals were relatively flat. June sales were extremely strong +16%, I see this as mainly driven against the constricted J3 sales post earthquake in 2011.
The Japanese brands drove market growth with newly stocked inventory. June sales were extremely strong for Honda in particular, up 84%. Nissan and Toyota had more regular supply last year leading to results more in line with YTD numbers.
Reports today of GM taking a 7% stake in PSA aren’t bad news in the long-term. GM has a great reputation for petrol engine development, and needs to focus its products in Eur. PSA has great product and top class diesel, but lacks scale. But the real sticking point remains: Too much capacity in Europe! Any credible PSA/GM plan would need:
Aulnay — already fully expected that PSA will announce the closure post April election in France.Rumors of this closing have drawn virulent protest for the past year or more. If not, I am suspect on PSA “recovery”
Ellesmere Port (UK), the UK government has drawn a line in the sand to keep GM’s two plants open. British politicians and labor successfully lobbied to stay open during GM’s tumultuous 2009 restructuring of Opel, and are already mobilizing.
Bochum (North Rhine-Westphalia, Germany): This one is not so easy. The German auto market has been strong, and the German public has been pushed far in recent months with labor gearing up again to pressure politicians in the
While many investors have been focused on the collapsing Euro market and the booming US market, guess what happened to the yen?
Yes the domestic market in Japan is “spinning its wheels” even with government subsidies, the recent drop in yen will make a significant impact on J3 earnings if it holds. Currently, forecasts are mostly based with FX rate lower than 80, if the yen pulls to the low 80’s that will be a slight boost on the year-end translation. If it sticks, it could be some unexpected tailwinds.
The Brazilian auto market grew ever so slightly in 2011, but imports share of the market spiked up 480 bps to 23.6%. So, in a market up a mere 3.4% in 2011, locally produced passenger cars were down 6.6%. That’s gotta hurt in an industry used to seeing steady double-digit growth for the past decade. And it’s a concern for the development of the local supply base.
Where they coming from? One might think cheaper Asia, but also look North with the recently enacted FTA with Mexico.
Imports from Mexico have tripled since 2007, and in 2011 alone, they rose by 40% to $2 billion, while Brazil exported just $372 million worth of vehicles to Mexico. I’ve commented in the past on the “piling in” of global automakers to Brazil, but at the same time, the list of automakers Continue reading →