2012 US SAAR – Strong year, decent behavior, I was wrong

Early in 2012 I went out on a limb with a low-ball forecast for the US market of 13.5 million, I was way low.  2012 sales hit 14,49 million, 1 million higher than I saw coming.  Great news for automakers and particularly dealers — maybe some tough news for buyers looking for a deal.

Main underestimation:

• Easier access to credit with all major OEM’s reaching back into sub-prime.
• Increased consumer confidence with a steady increase in SAAR rate including a strong push at year-end.
• Continued deals as GM and Ford fought to keep the volume if not the market share they gained in 2011 when the Japanese were hamstrung.

Euro Auto Capacity Reduction: a snapshot and thoughts

Ford’s announcement today that the company will cut it’s Euro capacity by 15% or 350,000 units shows that Alan Mulally has shown the same courage he used to save Ford from the US auto bailout to his Euro operations.  Rather than prolonging the agony of Euro restructuring like so many other players, Ford has taken a decisive step.

Despite almost two years of bluster from continental players, no other make has closed more than one plant.  Even PSA, in its dire straights 

China August Auto Sales view; relax

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 

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

May US SAAR continues subdued growth

US Sales were up 16% for May 2012. SAAR comes  out at around 13.8 million for the month, which  threw some cool water on analysts expecting the 14+ million pace to continue. What is worrisome is that too many analysts took their numbers up on a strong April that clearly showed some flattening signs as did May. Whenever I see mid-month weakness in the numbers followed by an ultra-strong close, I see slowing demand. Jan – Apr tracked at a 14.5 million pace, and May has pulled that down to 14.3 million. While bulls had rushed to push some numbers up around 15 million, more experienced market watchers have held closer to 14 million forecasts. Why does it matter?

April US sales take a breather. Not to worry. Well, not too much.

US auto sales are in today and the results are pretty interesting at first glance:  At the moment, we have sales +3%, not worrying as last April was a big month and Q1 was solid as we end the first 4 months up 10%.  

While I‘ll probably eat my over my low-end forecast for the year (13.5 million), April appears to be throwing some luke-warm water on those calling for 15 million this year and 16-17 soon after.  As I’ve said all along, replacement demand is not linear, and the spike in recent buying is

China 2012 Auto market, another two tiered year.

When I saw that China Q1 2012 auto sales were down 1.2%, I wondered was this the “soft landing” or just the beginning. After growing 32% in 2010, the market slowed to a “modest” 5.4% uptick for 2011, Q1 may be disheartening; however, March sales were “up a tad.” Well, I had the chance last week to spend some time last week with executives from the Chinese auto retail sector and looked a little deeper with a front-line perspective.

Following some takeaways from my listening:

• The PV market is and has been bifurcated. The 2010 incentives to spur growth of local brands accelerated the spread versus global brands. This explains why

US SAAR 2012 math: 2012: 1+1=1.5

Automotive News ran a great article this week on why the consensus for 2012 US SAAR is stretched to more than 14 million.  Mark Rechtin wisely did the old trick of adding up all the company forecasts and got …..14.5 million, surprisingly the high end forecast. If you’ve read my past columns you know I clearly don’t believe that everyone is going to hit their number and that 1+1 this year will be far less than 2.

So let’s look at who should and who might not.  The key to volume this year will be two main points.

1) New Product

2) J3 recovery with Toyota, Honda and to a lesser extent Nissan clawing back market share lost in last year’s earthquake.

3) Well, there is a point 3, one I hate to mention: discounts and fleet sales!

Euro 2012: down 5%, could be!

Since no one really knows, I thought I’d put out my forecast for EU 2012 light vehicle sales.  As we comp against French incentives and other markets facing ongoing austerity, I foresee the potential for a EU down 5%. Not a fait accomplis, but at this moment, I prefer prudence.

The trick is in the mix.  With macro uncertainty, I leave Germany and neighbors flat, and contrary to many who feel the Latin markets have bottomed, I see continued decline in France, Spain and Italy.  UK exit rates for 2011 were concerning, and the best description I heard from OEM’s is “a mess, but it could be worse,” so:

What’s this mean:  It’s about exports, where the Germans and Renualt have the edge.  Impact from falling euro should be supportive.  Also, see my recent note on downsizing which continues in Europe as well.  New technology on gas engines and diesel pulling back. VAG still needs a way to sell more small cars.

Come on VW and Suzuki, make nice! no value creation here

What in the heck are VW and Suzuki doing?  Have they been taking management seminars from Greek and US politicians?  Nothing comes of public bickering in what is a DOOMED relationship.  A lot of press reports seem to put VW in the driver’s seat, not surprising since they’ve been on a roll with success lately.

I see it a bit differently, I remember first meeting Osamu Suzuki