Articles in Category: Automotive

U.S. auto sales increased 3% in March over a year earlier, but warning signs emerged that car companies are stretching to keep demand humming after record results last year.

Free Sample Report: Our April Metal Buying Outlook

March’s selling pace came in at an adjusted annual rate of 16.57 million light vehicles, well below analyst expectations and the 17.5 million clip the industry reported in February. Detroit’s big three automakers each reported sales gains, but their results missed expectations, sending shares lower. Automakers overall sold 1.6 million light vehicles in March.

Automotive_Chart_April-2016_FNL

Automotive remains a coveted market for both steelmakers and aluminum smelters and the healthy price increase of 5.9% in our Automotive MMI reflects that. Automotive metals also got a boost from copper as the wiring metal also posted an increase this month, reversing a long flat streak.

Fiat Chrysler Automobiles said sales rose 8% to 213,187 vehicles in March. Ford Motor Co. sales rose 7.8% over a year earlier to 253,064 vehicles. General Motors’ sales edged up less than 1% to 252,128.

While those numbers might be cause for concern, long-term, they’re certainly not being felt in raw materials purchases by the Detroit automakers yet. Almost all of the component prices of our Automotive MMI were up in March and the phenomenon looks like it’s global with Chinese prices (mostly) joining U.S. and Korean ones in marching higher in lockstep.

Compare Prices With The March 2016 MMI Report

The China Automobile Dealers Association said at its monthly news briefing that one-third of dealers it surveyed said demand increased in March, up from 2.7% in February, with the survey predicting stable demand this month.

Expect steel and aluminum companies to continue to aggressively court automotive customers, especially as new automobile technology, such as Tesla Motors‘ new, less-expensive sedan is rolled out.

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Reading Toyota Motor Corp.‘s media releases, you would think the firm’s support of hybrids and fuel cell cars is all about saving the environment.

Free Download: The March 2016 MMI Report

While we don’t doubt the commitment of both, the firm and its management to such ethical pursuits, Toyota’s stated vision for the future has as much to do with hard-headed realism. Toyota is reading the writing on the wall with its environmental motives. The auto industry is engaged in the greatest technological endeavor since the early development of the gasoline engine 100 years ago.

Pioneering the Prius

Toyota can be said to have led the way with the commercial development of gasoline-electric hybrid technology, in the face of considerable skepticism when the firm pioneered it with the Prius in 1997. Since then, Toyota now has its fourth incarnation of the class-leading hybrid and has delivered more than 8 million cars according to the Fincancial Times, with the Prius in all its versions accounting for nearly half of it’s domestic sales.

Hybrid Car

Toyota changed the game with the Prius, can it do so again with hydrogen fuel-cell cars? Source: Adobe Stock/6th Gear.

Automakers are being driven by both public sentiment and government regulation to play their part in dramatically reducing global carbon emissions. The industry recognizes this and is quietly pouring an immense amount of resources, money and talent into finding solutions. Read more

The London Metal Exchange is looking to make large positions more transparent and India is not applying its new steel quality standards to automotive imports. At least not yet.

LME Wants Transparent Reporting

The London Metal Exchange said on Thursday it’s seeking views from its members and other interested parties about the potential for more transparent reporting of positions above certain thresholds.

Free Download: The March 2016 MMI Report

The LME monitors all positions held on its market, what it is proposing is a measure to put the onus of reporting any large positions on members.

India Sets New Steel Quality Standards

India imposed new quality standards on steel products sold in the country Thursday, but delayed bringing auto-grade steel imported by automakers under the purview of the new order by six months.

Free Sample Report: Our March Metal Buying Outlook

Indian automakers import about 1 million metric tons of high-tensile steel annually, mainly from Japan and South Korea, and had sought an extension to avoid disruption in production.

It was a third flat month in a row for the Automotive MMI as strong sales in the US and surprisingly resilient ones in China paced end-user markets, but still couldn’t increase the prices of automotive metals as oversupply still plagues global markets.

Free Download: The February 2016 MMI Report

Here in the US, Ford Motor Co. sold 20.2% more new vehicles in February than a year earlier. Fiat Chrysler Automobiles posted a 12% gain, while General Motors sales fell 1.5% as it cut back on fleet sales.

Automotive_Chart_March-2016_FNL

Toyota Motor Corp. sales rose 4.1% on strong sales of its RAV4 compact SUV (up 16%), the 4Runner midsize SUV (up 32%) and the Tacoma midsize pickup truck (up 14.5%). The Lexus luxury brand was up 1%.

Nissan Group posted a 10.5% increase, fueled by a 12.9% improvement that more than offset an 11% decline at the Infiniti luxury brand. American Honda sales jumped 12.8% as its top selling Civic and Accord rose 32% and 19%, respectively.

Chinese Sales Resilient

In China, sales in the world’s biggest auto market rose 7.7% in January, as demand was driven by a lowered tax for small engines.

Sales of passenger and commercial vehicles jumped to 2.5 million units in China in January, according to data released by country’s Association of Automobile Manufacturers. Passenger vehicle sales rose 9.3% to 2.23 million units, while commercial vehicle sales declined 3.4% to 303,600 units, the body said.

Oversupply continues to be the culprit for flat automotive metal prices as products such as London Metal Exchange copper and hot-dipped galvanized steel still have large stockpiles available in major markets. The US scrap steel is markedly bearish even by the low standards of the overall sluggish commodity market.

There is also growing concern that end-product demand from large consumer markets such as the US and China cannot last at current rates. While finance costs in the US are expected to stay low, many are concerned that automakers have overextended themselves by investing in aluminum and steel production facilities and, if demand does fall in 2016, automakers will find themselves shuttering new production or borrowing to meet construction costs.

In China, growth has been fueled by the burgeoning used car market there, one whose sales do not trickle down to metal suppliers.

Free Sample Report: Our February Metal Buying Outlook

Continue to monitor automotive metal prices and be cautious with forward purchases as there’s still not any real indication that this is a flat bottom or just a plateau momentarily pausing a larger fall.

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Tata Motors‘ marketing division is breathing a bit easier these days.

Earlier this month, MetalMiner reported that one of India’s auto majors was suddenly saddled with a name problem for a key, new product. Its latest hatchback, named Zica, launched recently, sounded similar to the dreaded virus Zika.

Free Download: The February 2016 MMI Report

The top honchos at India’s fifth-biggest automaker, which owns the Jaguar and Land Rover brands, went into a huddle, wondering how they would be able to tackle the branding problem. Now, after an interesting exercise, the car has had an image makeover and has been renamed, officially, as Tiago. And, yes, this is the same car which is being endorsed by none other than world soccer player of the year Lionel Messi.

From Zica to Tiago

For months, the marketing division spent thousands of dollars promoting the former Zica’s, now Tiago, promotional activities, until that pesky Zika virus came along and infected not just its victims, but Zica’s worldwide brand value.

Tim Leverton and Mayank Pareek at the official unveiling of the new Tata Zica at an auto show in Goa last December. Source: Tata Motors

Tim Leverton and Mayank Pareek at the official unveiling of the new Tata Zica at an auto show in Goa last December. Source: Tata Motors

“Empathizing with the hardships being caused by the recent Zika virus outbreak across many countries, Tata Motors, as a socially responsible company, has decided to re-brand the car,” the company said in a statement.

The Tiago will cost about $5,800 and will come in gasoline engine and diesel versions. Tata Motors will apply for regulatory registrations, with the aim of formally launching Tiago to the market by the end of March, it said in a statement.

Still Fantastico?

So, how did the auto major zero in on the name Tiago? Here’s how: The Tata Tiago name was chosen after a global crowd-sourcing competition called “#FantasticoNameHunt” was conducted in which fans got to vote for their preferred new name from a shortlist of 3 suggestions — Tiago, Adore, and Civet. Tiago beat the other two.

Free Sample Report: Our February Metal Buying Outlook

Auto analysts are hopeful that the name change may yet save the day for this new hatchback, after it was launched at the Auto Expo in New Delhi earlier in February. Zica, by the way, stood for “zippy car.”

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

After news of Toyota’s recent supply chain troubles, so ably covered by my colleague Lisa Reisman last week, news from the US car industry, by contrast, couldn’t be better.

Free Download: The February 2016 MMI Report

General Motors reported $9.7 billion net income for 2015 as it was bolstered by buoyant US light-truck sales. Results for the fourth quarter more than tripled from $1.99 billion to $6.27 billion although, admittedly, benefiting from $4 billion in favorable special items.

Even so, the underlying figures were also boosted by the strong sales for the core North American operations, where earnings before interest and tax adjusted for special items rose 25% to $2.77 billion, on revenue up 9.5% to $27.7 billion. The company said low fuel prices boosted sales of more profitable pickup trucks and sport-utility vehicles.

Sales Surging

A rising tide lifts all boats, they say, and a strong North American market has also benefited Ford Motor Co. whose sales of SUVs and pickups soared last year. Ford announced a 13.6% rise in SUV sales for its Ford and Lincoln brands and a 13% rise for pickups. GM’s GMC premium light-truck brand recorded 13% year-on-year sales growth, while Fiat Chrysler’s growth came nearly entirely from a 42% surge in sales for its Jeep SUV brand. All manufacturers finished the year on a high, but for Fiat Chrysler sales were its strongest in the month of December since Chrysler was founded in 1925.

Car Sales

Source: Wall Street Journal

The US car industry has been a major bright spot for metals consumption in recent years with rising volumes driving demand for both steel and aluminum. Indeed, for aluminum, so strong has the demand been many manufacturers have made investments in dedicated automotive-grade production facilities to meet demand.

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Almost everyone, by now, has heard of the deadly Zika virus which has prompted the World Health Organization to declare a global public health emergency. But this virus has felled another unlikely victim: a car in faraway India. You heard right.

Free Download: The January 2016 MMI Report

India’s leading automobile manufacturer Tata Motors never saw this one coming. Its newest hatchback, the Zica, is about to be officially launched, yet, the name, which matches with that of the virus if you ignore the spelling, sent the company into a public relations tizzy.

Tim Leverton and Mayank Pareek at the official unveiling of the new Tata Zica at an auto show in Goa last December. Source: Tata Motors

Tata Executives Tim Leverton and Mayank Pareek at the official unveiling of the new Tata Zica at an auto show in Goa last December. Source: Tata Motors

For months, the marketing division spent thousands of dollars on Zica’s promotional activities until the virus Zika came along. Now, Tata Motors has announced a name change, though at press-time, the new name is not officially out yet.

Zika vs. Zica: Bad Timing

Auto analysts are now wondering whether the change has come too little, too late since the hatchback is to be launched at the Auto Expo in New Delhi on Wednesday. Zica, by the way, stood for “zippy car.”

Sadly, what also turned out to be “zippy” was the rapid spread of the Zika virus.

Zica’s marketing campaign included advertisements featuring football legend Lionel Messi. In another messy coincidence, Zica’s brand ambassador, too, hails from Argentina where the first case of a Zika-infected person, who reportedly contracted the disease after being bit by a mosquito, was from.

New Name But Not Yet

In a statement announcing the rebranding, Tata said: “Empathizing with the hardships being caused by the recent Zika virus outbreak across many countries, Tata Motors, as a socially responsible company, has decided to rebrand the car.”

Tata has said for the time being, though, the compact car will still carry the Zica label. At least until the auto show ends. The new name will be announced in a few weeks.

For auto lovers, the Zica was Tata Motors’ first hatchback offering after the globally famous Nano, billed as the cheapest car in the world. And for those of you out there who love to get your hands greasy with vehicular details, Zica is said to have a 1.2-liter petrol (gasoline) engine or a 1.05-liter diesel engine, both with three-cylinders. The petrol engine will be a new all-aluminum one. Both the engines are paired to a five-speed manual transmission.

Last Week For The January 2016 MMI Report

Along with the Zica, Tata Motors will be showing off a slew of new models including two forthcoming SUVs. Over 80 vehicle launches are expected at the Auto Expo 2016, with Fiat-Chrysler-owned Jeep making its India debut.

 

This week, the Bank of Japan introduced negative interest rates in the latest attempt to goose the Pacific nation’s stalled economy.

Free Sample Report: Our February Metal Buying Outlook

Essentially penalizing people for saving money seems like a curious thing to do to try to turn around a struggling economy, but it’s not the first time banks have gotten a push to force them to lend. The European Union has done it, too, in recent memory.

Shorter supply chains for in-demand products could benefit retailers around the holidays. Source: Adobe Stock/cacaroot.

Boy does Toyota Motor Corp. ever wish it had a bigger supply chain this week. Source: Adobe Stock/cacaroot.

My colleague and metal price analyst Raul de Frutos wrote that, “negative interest rates mean that depositors must pay regularly to keep their money in the bank. This measure encourages people and businesses to spend, invest and lend money rather than pay a fee to save it and keep it safe.” Read more

Toyota Motor Corp. said on Saturday it may halt production at its domestic plants early next month due to a steel shortage, following an explosion at a steel plant operated by one of its affiliates.

Free Download: The January 2016 MMI Report

The blast at an Aichi Steel plant has curbed production of steel parts, which may impact output at the world’s best-selling automaker which produces around 40% of its global output in Japan.

“At the moment, there is enough supply inventory to keep our domestic plants running until Feb. 6,” a Toyota spokesman told Reuters, adding that overtime and weekend shifts for next week had been canceled.

“After that, we will be monitoring our supply situation on a day-by-day basis and decide accordingly.”
Free Sample Report: Our January Metal Buying Outlook

Aichi Steel said that the Jan. 8 explosion at its Chita plant in central Japan dented production of specialty steel parts. It added that it aimed to resume operations in March.

Our Automotive MMI held steady for the third month in a row at 68.

Free Sample Report: Our January Metal Buying Outlook

Considering that other metals prices are still falling, it’s quite a feat that automotive has been able to even hold steady for this long. Prices of stainless, aluminum and copper are all down in their individual MMI sub-indexes this month and our Raw Steels MMI was flat.

Automotive_Chart_February-2016_FNL

Low prices simply have not been enough to entice larger raw material purchases by automakers. U.S. auto sales fell slightly in January because of the East Coast snowstorm, but analysts say end user demand remains strong and buyers will likely head back into dealerships this month. Sales fell less than 1% to 1.1 million, according to Autodata Corp.

Low gas prices and even lower interest rates are continuing to fuel sales and most automakers are optimistic that they can break last year’s sales record by the end of the year. The problem facing metal producers is that there is still so much oversupply out there that even the market hunger for new cars, trucks and SUVs can be sated several times over by the stockpiles that currently exist.

Producers Targeting Automotive

Automotive is still a coveted market for most producers. Nucor Corp. recently opened an office in Detroit as part of a push to increase its sales to the auto industry by 40% to 50% over the next two years. Charlotte-based Nucor saw its sales to the automotive industry increase 20% last year — 1.4 million tons of steel products — over 2014’s numbers.

Alcoa, Inc. is even coming closer to realizing its previously announced split by naming new directors for its new automotive and aerospace company, all of them with experience in the fields.

Free Download: The January 2016 MMI Report

The fundamental strength of the sector will likely still be there when stockpiles finally dwindle and we see prices rise. Many are predicting that rebound for later this year, but there’s very good reason to believe 2016 could be another low-price year as there is still no definitive deal to reduce oil production and many miners and metal producers are not curtailing production.

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