ICIS’ Mark Victory wrote a interesting article this week, in which he tried to relate differing views of the economic outlook to auto demand, the area in which he specialises. The underlying issue, of course, is the complexity of the value chain, where supplies are often ordered months in advance, whilst most data will only appear weeks after the event.
His analysis concluded that the indicators, good and bad, “give a snapshot of the market at the time they are compiled, but they do not offer a crystal ball view into the future“.
In uncertain times, the blog believes that raw data on auto sales is our best guide as to what is really happening. Last year, the EU was the largest auto market in the world, thanks to the various stimulus programmes. But no longer.
As ACEA (Association of European Automakers) note in relation to the above chart, auto sales in July and August “continued the downward trend seen in Q2“. One can’t get clearer than that about the direction of a market. The Big 5 markets in terms of volume were also all negative versus 2009: France -8%; UK -18%; Italy -19%; Spain -24%; and Germany -27%.
The trend is also worsening, now that all stimulus programmes have ended. Q1 sales were up 9% versus 2009, with stimulus programmes still underway in the Big 5 with the exception of Germany. But they were down 8% in Q2, as these came to an end. So far, sales are down 16% in Q3.
Increasing demand for greater fuel efficiency will continue to support chemical and polymer sales, as manufacturers replace steel and glass. But European consumers are providing fairly clear evidence of dramatic falls in auto demand itself, as austerity programmes begin to bite.