Automotive sales fell 5.8% in October, marking the first time since the beginning of the recession that sales of new cars and trucks in the U.S. declined for three consecutive months.
The yearly rate of sales for October was 18.02 million, according to Autodata Corp. That’s in line with the 18.18 million in October 2015. Nearly every major automaker posted sales declines in October. Ford Motor Co. and Fiat Chrysler Automobiles NV both posted double-digit declines of 11.9% and 10.3%, respectively. General Motors Co. beat analyst expectations, with sales down only 1.7%.
We had warned last month that last month that while our Automotive MMI was flat, that could signal a plateau for end-user automotive sales and this month we saw the other side of that plateau, as the sub-index fell 4%.
Automotive metals are still a lucrative market for steelmakers and aluminum smelters, but the drop in sales could be a bit worrying as any prolonged drop in demand could for vehicles could eventually be felt down the supply chain.
However, most analysts are still bullish on automotive sales despite the fact that the sales record of 2015 will mostly likely not be met.
“Key fundamentals like job security, rising personal incomes, low fuel prices and low interest rates continue to provide the environment for a very healthy U.S. auto industry,” GM Chief Economist Mustafa Mohatarem said in a statement. “The U.S. auto industry is well positioned for sales to continue at or near record levels for the foreseeable future.”
Automotive demand is strong in Europe and other mature markets, too.
BMW AG recently reported higher profit in the third quarter even though a decline in sales in the U.S. and increased investment in electric vehicles and other technology eroded earnings at its automotive division. Fellow German automaker Daimler (maker of Mercedes-Benz automobiles) and BMW are benefiting from the strong recovery in Europe’s car markets and renewed demand in China.
Austria’s Voestalpine AG, a company that supplies both with automotive steel and hot-briquetted iron ore, recently held an event wherein its CEO Dr. Wolfgang Eder said that their automotive metal sales, most of which are to European customers, are strong.
“We do not see it different than what we see and here in U.S. auto markets,” Eder said. “We do not see any weakness. These deliveries are lower than U.S. domestic production, and while we do WANT to do more business with American automakers, those customers (BMW and Daimler) are paramount right now because we know that people, especially in the U.S. market, like those cars.”
Actual Automotive Metal Prices
Hot-dipped galvanized steel fell to $691 per short ton this month from $735/st in October, a drop of 6%. U.S. Platinum dropped to $980 an ounce this month from $1,025/ounce last month, a fall of 4.4%.