US June auto sales fall from May on high prices, interest rates, cyber-attack, but could grow in H2

HOUSTON (ICIS)–US June sales of new light vehicles fell from May, but total sales in the second quarter showed a modest improvement over Q1, according to data from the US Bureau of Economic Analysis (BEA).

While the June sales figures represented a sour end to the quarter, Kevin Swift, senior economist for global chemicals at ICIS, said he anticipates seeing modest sales growth through the rest of the year and into 2025 and 2026.

June sales fell by 4% to a 15.29-million-unit pace, well below the forecast of 15.9 million for the full year from the National Automobile Dealers Association (NADA).

Sales faced headwinds from the usual impediments – higher prices for new vehicles and higher interest rates – which may have prevented some from entering the market for new light vehicles.

But a cyber-attack against software maker CDK Global that disrupted operations during the month may be the main reason sales fell as the higher costs and interest rates have been the norm so far this year.

Software from CDK Global is widely used in US auto dealerships to process sales and other transactions.

Declines were seen across all auto segments except for foreign light truck sales.

Sales were flat when comparing the first six months of the year with the first six months of 2023, Swift said.

Still, Jincy Varghese, ICIS demand analyst, expects sales to rise over the rest of the year.

While protectionist trade policy and potential regulatory measures could affect auto sales, performance in all regions except Europe are likely to be better than expected in the second half of 2024.

Global automotive value-added output in 2024 is expected to grow by 0.4% compared with 2023, Varghese said, with the third quarter of 2024 forecast to remain relatively flat compared with the third quarter of 2023, according to Oxford Economics.

US auto sales in 2024 are expected to grow 6.4% compared with 2023, Varghese said.

The third quarter of 2024 is forecast to grow by 2.6% year on year, according to Oxford Economics.

US President Biden, in a statement released last month, directed his trade representative to increase tariffs on $18 billion of imports from China to protect American workers and businesses.

The tariff rate on electric vehicles (EVs) under Section 301 will increase from 25% to 100% in 2024.

According to the US Census Bureau, US light vehicle sales rose 0.8% month on month in May with total sales of 15.9 million units (up 2.5% year on year and 8.9% down from 2019).

CHEMS USED IN AUTOS
Demand for chemicals in auto production come from, for example, antifreeze and other fluids, catalysts, plastic dashboards and other components, rubber tires and hoses, upholstery fibers, coatings and adhesives, Swift said.

Virtually every component of a light vehicle, from the front bumper to the rear taillights, features some chemistry.

The latest data indicate that polymer use is about 423 pounds (192kg) per vehicle.

Meanwhile, electric vehicles (EVs) and associated battery markets are an important growth opportunity for the chemical industry, with chemical producers separately developing battery materials, as well as specialty polymers and adhesives for EVs.

Focus article by Adam Yanelli

Please also visit the ICIS topic page Automotive: Impact on Chemicals

Thumbnail image is of sports-utility vehicles at a Colorado dealership. Photo by David Zalubowski/AP/Shutterstock