US Nov auto sales rise but could face headwinds from tariffs

HOUSTON (ICIS)–US November sales of new light vehicles ticked higher from the previous month and rose compared with the same month a year ago, but proposed tariffs on Mexican and Canadian imports by President-elect Donald Trump could create further headwinds for the industry.

Data from the US Bureau of Economic Analysis (BEA) shows year-to-date sales up by 1.7%. The following chart shows US auto sales from 1989 to present.

Note: Gray bars show when the US was in a recession

Auto sales are important because the auto industry is a key end market for chemicals demand.

Although automobile sales and foreign truck sales were weak, this was offset by a strong gain in domestic light truck sales, according to Kevin Swift, senior economist for global chemicals at ICIS.

“Affordability has been an issue in this market and is showing signs of improvement, which, if continued, will provide further tailwinds,” Swift said.

But shares of publicly traded US automakers fell last week after Trump announced that he plans on levying 25% tariffs on all products from Canada and Mexico as well as an additional 10% tariff on goods from China – all three of which are critical sources for the auto industry’s global supply chain.

Swift said the latest report indicates that US consumers continue to be in the market for new vehicles and that continued improvement in sales will benefit industrial production.

Swift said that inventories on dealer lots have improved by almost 46% compared with the same month a year ago, which should also help boost sales.

CHEMS USED IN AUTOS
Demand for chemicals in auto production comes 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.

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