News from Notch Consulting, Inc.

February 2, 2015

NADA sees low gas prices driving light truck sales in US

Filed under: Auto, General — Notch @ 6:30 am

As reported in Tire Business, the National Automobile Dealers Association (NADA) projects that new car and light truck sales in the United States will rise to 16.9 million vehicles in 2015, split 44% for cars and 56% for light trucks and SUVs. NADA pointed to low gas prices, low interest rates, increased job growth, and an improving housing market as being the main drivers for vehicles sales and in particular a shift toward larger vehicles such as light trucks and SUVs. The group also said that its forecast for 2014 of 16.4 million new vehicle sales was on target.

“We expect to see significant growth in sales of light trucks, particularly in the large-size CUV and SUV segments,”said NADA Chief Economist Steven Szakaly at a Jan. 23 press briefing during the NADA Convention & Expo in San Francisco.  “At the end of the day, consumers like the utility and comfort that larger vehicles provide. Lower gasoline prices accelerate that shift.”

“The pickup truck segment, in particular, is expected to benefit from an improving housing market, climbing to a 15.2-percent share this year from 13.7 percent in 2014, NADA said.

On the downside, small and midsized cars are likely to face a tougher market in 2015. Mr. Szakaly said he expects incentives to rise on small and midsize vehicles while hybrid sales are expected to be slower as long as the price of oil remains relatively low.

Midsize cars are expected to decline in share of total light vehicle sales to 17 percent from 18.6 percent, while small cars are expected to lose 1 percent of share.

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May 26, 2014

China moves to scrap 5M vehicles this year

Filed under: Auto — Notch @ 2:31 pm

From Reuters comes news of plans by the Chinese government to remove five million aging vehicles from the country’s clogged roadways this year alone, including 330,000 vehicles in Beijing alone.

In a wide-ranging action plan to cut emissions over the next two years, China’s cabinet, the State Council, said the country had already fallen behind in its pollution targets over the 2011-2013 period and was now having to step up its efforts.

As many as 5.33 million “yellow label” vehicles that fail to meet Chinese fuel standards will be “eliminated” this year, the document said. As well as the 330,000 cars in Beijing, 660,000 will be withdrawn from the surrounding province of Hebei, home to seven of China’s smoggiest cities in 2013.

Beijing plans to limit the total number of cars on the road to 5.6 million this year, with the number allowed to rise to 6 million by 2017. Last year it cut the number of new licence plates by 37 percent to 150,000 a year and is also paying for another 200,000 ageing vehicles to be upgraded.

April 24, 2014

Notch publishes new report on automotive extended mobility systems: run-flat tires, tire repair kits, and self-sealing tires

Filed under: Auto, Run-flats — Notch @ 6:00 am

In 2008, 69% of all passenger cars assembled worldwide came equipped with a full-size spare tire, but by 2012 that number had fallen to just 48% as automakers sought to reduce vehicle weight and save space. By 2020, the number of cars with full-size spares is forecast to fall to 36%. Notch Consulting has published a new multi-client market research report that examines the systems that are replacing the spare tire in new cars: Prospects for Extended Mobility Systems: Run-Flat Tires, Tire Repair Kits & Self-Sealing Tires in OEM Passenger Car Markets. This 77-page report includes 17 tables detailing demand for each of these three products in OEM passenger car markets by region and by customer, as well as average pricing, market share by supplier, and profiles of leading suppliers. The report provides demand in units for all years from 2008 through 2013, as well as forecasts for all years from 2014 through 2020. Data on run-flat tires covers all years 2002 through 2020 and include both OEM and replacement demand. Contact Notch at info@notchconsulting.com for more information or to order.

February 24, 2014

President Obama orders tighter fuel economy standards for medium/heavy trucks

Filed under: Auto — Notch @ 5:45 am

President Obama has directed the National Highway Traffic Safety Administration along with the US Environmental Protection Agency to begin developing the next phase of fuel efficiency and greenhouse gas standards for medium- and heavy-duty vehicles. The proposed standard is due in March 2015, while the final rule is due March 2016, according to a Feb. 18 White House statement. A previous Obama administration standard imposed the first-ever standards for medium- and heavy-duty vehicles, implemented on model years 2014 through 2018.

January 13, 2014

US light vehicle sales expected to top 16M in 2014 for the first time since 2007

Filed under: Auto — Notch @ 6:00 am

Tire Business reports that multiple forecasting agencies covering the automotive industry expect US light vehicle sales to exceed 16 million units in 2014 for the first time since 2007, bringing to a close an extended period of very difficult restructuring in the US auto industry following the recession. Further, the US auto industry is in stronger shape now than in the pre-recession days, when the industry regularly over-produced and was forced to sell of excess inventory at cut-rate prices. In addition, a significant decline in the number of auto dealerships in the US means that each dealership should be selling more cars.

According to Tire Business, current forecasts for US light vehicle sales in 2014 include the following:

  • IHS Automotive: 16.03 million – expects sales to remain about 16M/year through at least 2019
  • LMC Automotive: 16.2 million
  • Kelley Blue Book: 16.3 million
  • Edmunds: 16.4 million
  • Toprack Consulting: 16.5 million
  • Ford Motor: 16 to 17 million, including about 300K medium- and heavy-duty trucks

 

May 13, 2013

LANXESS points to weak tire and automotive markets for 12% sales decline in 1Q

Filed under: Auto, General, Rubber Chemicals, Tires — Notch @ 10:35 am

LANXESS reported lower-than-expected earnings in its first quarter due to a weak market environment, particularly in the tire and automotive industries. First-quarter sales were down by 12 percent year-on-year to EUR 2.1 billion, mainly due to lower volumes and fallen selling prices.

Sales in the Performance Chemicals segment, which includes both the Rubber Chemicals and Rhein Chemie businesses, decreased by 7 percent to EUR 520 million. Volumes declined as a result of the weak demand from the construction industry due to the long winter and from the business units linked to the tire industry. Selling prices were stable. EBITDA pre exceptionals, at EUR 51 million, was EUR 32 million below the prior-period figure.

LANXESS anticipates a slight improvement in business for the second quarter. “The weak demand from the tire and automotive industries persists, but customer destocking is slowing down. We currently anticipate EBITDA pre exceptionals in the second quarter to improve sequentially but to be below EUR 220 million,” said LANXESS’ Chairman of the Board of Management Axel C. Heitmann. “The market environment will remain weak and volatile with low visibility persisting. We nevertheless expect an economic improvement in the second half of this year. Asia, particularly China, will perform substantially better, whereas market conditions in Europe will remain difficult.”

July 23, 2012

US car sales weaken in July following strong June

Filed under: Auto — Notch @ 1:17 am

The Associated Press reports that the raft of gloomy economic news may be starting to hurt U.S. auto sales.

Industry analysts and dealers said this week that sales during the first half of July slowed a bit from the robust pace in June. But they still were expected to be better than July of 2011.

For the first half of the year, sales of cars and trucks ran at an annual rate of 14.3 million, the best pace in 5 years. Car buyers bought everything from compacts to big pickups, making the auto industry a bright spot in the economy. The only hiccup came in May, when sales slipped to a 13.8 million annual rate as the stock market plunged. Buyers returned in June to drive sales back up to a 14.1 million rate.

Jeff Schuster was expecting sales to tail off in the early part of July, partly because promotions leading up to Independence Day may have pulled sales ahead into June. The senior vice president of forecasting at the LMC Automotive consulting firm in Troy, Mich. predicts July sales likely will come in at an annual rate below 13.8 million.

“With the weaker consumer confidence, the auto industry could be in for a roller-coaster second half, but it isn’t time to sound the alarm yet,” said Schuster, who is sticking with his forecast of 14.5 million sales for the full year.
If Schuster’s July forecast holds, sales would eclipse the 12.2 million rate of last July. Sales have come a long way from the doldrums of 2009, when only 10.4 million cars and trucks sold during the financial crisis. The recent peak for sales was 2005, at 17 million.

Dealers surveyed by Citi Investment Research analyst Itay Michaeli also reported a slow start to July. But Michaeli noted that auto sales normally are stronger in the final two weeks of a month as discounts kick in and dealers try to make monthly goals.

Not all analysts are predicting a big sales drop for July, though. Edmunds.com predicts an annual rate of 14 million, and Wardsauto.com is at 14.1 million. Ward’s analyst John Sousanis said he expects factors that fueled strong sales during the first half to continue. He said owners of car fleets, like governments and rental car companies, need to replace aging vehicles the same way individual owners do.

Car sales in Europe remain sluggish

Filed under: Auto — Notch @ 1:03 am

Car sales in Europe have declined steadily since October 2011 due to lower consumer confidence brought on by the debt crisis and generally weaker economic results. The auto industry has responded with discounts and incentives, but these efforts have not overcome the industry’s substantial headwinds.

According to ACEA (the European Automobile Manufacturers’ Association), new passenger car registrations declined by 2.8% in June in the EU 27 countries, continuing the downward trend commenced in October last year. In total, 1,201,578 new cars were registered in June. New car registrations totaled 6,644,829 units for the first half of the year, down 6.8% compared to the first six months of 2011.

June results were diverse across the EU 27 countries. Germany (+2.9%) and the UK (+3.5%) posted growth, while Spain (-12.1%) and Italy (-24.4%) contracted. The French market remained stable (-0.6%). From January to June, Germany (+0.7%) and the UK (+2.7%), the two largest markets, performed better than in the first six months of last year. Downturn prevailed in Spain (-8.2%), France (-14.4%) and Italy (-19.7%).

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