US car sales in 2015 jumped to a record level last reached 15 years ago as cheap gasoline, employment gains and low interest rates enticed Americans to buy new vehicles.
Automakers sold 17.5 million cars and light trucks in the US last year, a 5.7% increase, and, on average, they paid more for each one. Americans overall spent about $570 billion on new vehicles, fueling an industry revival putting more money in the pockets of auto workers, dealers and executives.
In China, a tax cut helped auto sales as new car sales became one of the few bright spots of China’s sputtering economy.
The Hold Steady
The gains couldn’t help our Automotive MMI do any more than hold its value from last month, as the index began the year 68, exactly where it ended 2015.
Low steel, copper and aluminum prices are another driver of discounts on automobile prices as automakers have seen their material costs plummet in 2015. Many dealers have been authorized to discount the already low prices of new cars, accordingly. Global surpluses of steel, aluminum and copper have not yet seen a significant dent despite a recent rally in aluminum.
It will take a sustained recovery in its component metal prices for the Automotive MMI to start seeing significant gains. The Justice Department also filed a civil suit against Volkswagen AG this week, signaling that the ongoing emissions scandal there will continue to affect platinum and palladium prices. Justice is pursuing $48 billion in fines against VW and any settlement for the embattled automaker would be in the billions.
Steady as she goes is not all bad news for automotive metals. The Commerce Department recently slapped tariffs of 255% on Chinese anti-corrosive steel, meaning that hot-dipped galvanized and other US automotive metals will be competing on a more even playing field with subsidized Chinese imports.
Perhaps 2016 will finally be the year that the tide of cheap imports is finally stemmed.
Actual Automotive Metal Prices
US hot-dipped galvanized steel fell from $530 a short ton in December to $495 a short ton this month, a 6.7% drop. US Platinum bar increased to $879 an ounce from $829 an ounce in December, a 5.7% increase. US Steel scrap increased to $173 a short ton this month from $167 per ton last month, a 3.6% increase.