Q2 2012 Global Auto Earnings: four not so obvious thoughts

While everyone is laser focused on the imploding European auto industry and we ponder the sustainability of the US volume recovery, there are a few things to keep an eye on that may not be top-of-mind:

1) Latin America: The meteoric growth of the Brazilian market has slowed to standstill and surrounding markets have stalled as well.  While the industry has expected the flattening market, a steep rise in  low-cost imports has created pricing pressure.  Companies like Fiat, GM and VW who had been enjoying the tailwinds of strong double-digit margins over the past decade will feel Continue reading


Chinese autos landing everywhere!

Euro stocks lead an auto drop today on negative China news.   Overblown short term reaction, I think so.  Sure VW, BMW and DAI have enjoyed steady income from China and that reads through to GM here in NA, but the latest spat of negative outlooks for a hard landing is not news for automakers.

The volume international makes in China include Toyota, Honda, Nissan, Hyundai, VW, GM and PSA.  But even they play in the lucrative high-end of the Chinese market through their high-end brands; Lexus, Infiniti, Audi.

Today’s news that China auto sales won’t hit the targeted 8% for 2012 is a blow to the bulls, but most investors are already bears.  

Continue reading

Brazil, Mexico and trading cars — FTA’s don’t always work exactly as planned

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

Rushing Into Brazil

With so much happening in Brazil, I thought I try to sum it all up.  The main theme isincreased localization for two reasons.  Capture some of the meteoric rise in the market and avoid recent tariff increases.