Automotive MMI: Despite low inventory, Q3 2020 automotive sales show improvement

The Automotive Monthly Metals Index (MMI) gained 2.2% for this month’s index value, as Q3 2020 automotive sales showcased some basis for optimism.
October 2020 Automotive MMI chart
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U.S. Q3 2020 automotive sales

Despite the May restarts of automotive manufacturers, U.S. showrooms faced low inventories this summer, putting a cap on sales despite solid demand.
“Available inventory is far below last year’s levels, yet sales continue to show surprising strength,” said Charlie Chesbrough, senior economist at Cox Automotive. “Going into the fourth quarter, the key question is: Can this continue? Clearly new vehicle buyers haven’t been hit as hard as other consumers during this recession, so demand is likely to remain stable over the near-term.”
General Motors, for example, reported Q3 2020 automotive sales fell 10% year over year to 665,192 vehicles.
“In a sign of a recovering industry, sales improved sequentially each month within the quarter,” GM said in a release. “Industry and GM sales rebounded significantly in September, finishing the month with year-over-year sales increases.”
Meanwhile, Ford reported Q3 2020 sales fell 4.9% year over year. Ford truck sales, however, showed growth. Total truck sales jumped 0.6%, while retail sales gained 8.3%. The quarter marked Ford’s best third quarter for truck sales since 2005, the automaker reported.
FCA US sales dropped 10% year over year in the third quarter. However, third-quarter sales rose 38% compared with the previous quarter.
Similarly, while Honda’s Q3 2020 sales fell 9.5% year over year, sales in September alone rose 11.5%.
“September marks a high-water mark for Honda sales this year with double-digit gains and our first month in positive territory since the pandemic began,” said Dave Gardner, executive vice president of National Operations at American Honda.
Nissan sales fell 32.4% in the third quarter on a year-over-year basis.

September sales surge

While automakers reported sales remained down on a quarterly basis, September new-vehicle retail sales were up from a year ago, according to a forecast jointly released by LMC Automotive and J.D. Power.
LMC Automotive and J.D. Power forecast September sales increased 3.4% year over year.
In terms of total sales, however, the automotive market posted a 7.5% decrease compared with September 2019 total sales.

China sales jump 11.6%

Meanwhile, sales in China, the world’s largest automotive market, rose 11.6% year over year in August, according to the China Association of Automobile Manufacturers (CAAM).
Overall passenger-car sales increased 6.0%. Car sales rose 5.8%, while SUV sales rose 6.5%.
As for commercial vehicles, sales increased 41.6%. Commercial truck sales rose 49.0%.

British automotive manufacturing sector faces challenges

Late last month, MetalMiner’s Stuart Burns broke down the challenges in front of the U.K. automotive sector.
“U.K. car manufacturing fell 44% last month compared with a year earlier,” he wrote. “Domestic orders and exports remain severely depressed. Last month’s performance marked the sector’s second-worst since car plants restarted after lockdown.
“The Financial Times went on to advise that just 51,039 cars rolled off British production lines. The total fell from 92,153 in August 2019. Meanwhile, August output for U.K. buyers fell 58% to just 7,795 vehicles. The number of cars made for export fell 41% to 73,443 cars.”
Furthermore, the sector faces the double whammy of rising coronavirus cases and the impending Brexit.
“The industry is not in a good state to handle the country’s imminent exit from Europe on Jan. 1,” Burns added. “In addition, the automotive industry has been at the forefront of demanding a free trade deal between the U.K. and the E.U., saying last week that “no deal” would cost the pan-European automotive industry some £100 billion in lost trade over the next five years.
“Europe, though, is proving very unwilling to retain the open-door, free-trade environment for electric vehicles – which it sees as the future – as it currently does for internal combustion engine (ICE) vehicles.”

Fiat Chrysler, PSA merger

In M&A news, Burns also delved into the planned merger of Fiat Chrysler and France’s PSA. The combined company will take on the name Stellantis.
“PSA is the owner of brands like Peugeot, Citroen, Vauxhall, and DS,” Burns explained. “The deal, valued at $50 billion, would form a 50/50 partnership with a turnover of some €170 billion ($200 billion) a year and annual production of some 8.7 million units.
“As such, the deal would put them, again, third. By other measures, they would be fourth, behind at least Volkswagen and Toyota, and possibly the Renault–Nissan–Mitsubishi Alliance (if you consider that one entity).”

Actual metals prices and trends

The U.S. HDG price rose 15.2% to $848 per short ton as of Oct. 1.
The U.S. shredded scrap steel price rose 9.7% to $272 per short ton.
The LME three-month copper price retraced after a dynamic summer, falling 2.1% to $6,559 per metric ton.
The Korean 5052 aluminum coil premium gained 4.3% to $3.16 per kilogram.
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