Automotive MMI: US automotive sales show strength in January

automotive sale in dealership
Maksym Povozniuk/Adobe Stock

The Automotive Monthly Metals Index (MMI) ticked up 4.6% for this month’s value, as automotive sales were strong in January.
Automotive Chart February 2021 FNL

US auto sales

On the sales front, Honda reported its US sales fell by 9.2% in January. Sales totaled 92,225 units in the first month of the new year.
Honda truck sales fell 2.2%, while car sales dipped 19.1%.
Last month, Nissan reported Q4 2020 sales fell 19.3% year over year, while full-year 2020 sales dropped 33.2%.
Hyundai Motor America reported January sales rose 2% year over year. Furthermore, Hyundai’s retail sales ticked up 1% and set an all-time January retail record.
“We are off to a strong start to the year and remain optimistic for continued sales and market share gains in 2021,” said Randy Parker, senior vice president for national sales at Hyundai Motor America. “We’ve been able to consistently grow retail sales thanks to our outstanding product lineup and a commitment from our dealer partners to exceed customer expectations.”
As noted last month, General Motors reported Q4 2020 total sales rose 5% year over year. The automaker said the quarter marked its best Q4 for retail sales since 2007.
Ford Motor Co. last month announced its Q4 sales fell 9.8% year over year.
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January growth in automotive sales

Overall, J.D. Power and LMC Automotive forecast January sales would come in up from a year ago.
The firms forecast new-vehicle retail sales in January would be up 6.1% year over year when adjusted for selling days (January 2021 has one fewer selling day).

“January continues the strong performance observed in Q4 of 2020 and points to a positive outlook for the balance of 2021,” said Thomas King, president of the data and analytics division for JD Power. “The growth in retail sales is encouraging, especially as it is being achieved with higher transaction prices and lower incentive levels.”
Like last year, however, when inventory levels at times couldn’t meet surging consumer demand, supply chain disruption remains a concern, King indicated.

Biden executive order on climate change includes zero-emission government vehicles

President Joe Biden has signed 25 executive orders as of Feb. 2, covering everything from Medicaid to worker safety to federal procurement guidelines.
In addition, Biden signed an executive order laying out his administration’s goals in the fight against climate change.
One section of the order covers the administration’s strategy for clean electricity and vehicle procurement.
The strategy includes “clean and zero-emission vehicles for Federal, State, local, and Tribal government fleets, including vehicles of the United States Postal Service.”
Generally, the shift toward zero-emission vehicles means augmented demand for rare earths like neodymium and dysprosium, not to mention more common base metals like copper.
According to the Copper Development Association, conventional cars use 18-49 pounds of copper, while battery electric vehicles use 183 pounds. Furthermore, battery electric buses use 814 pounds of copper.
The Copper Development Association forecast demand for copper in electric vehicles will rise by 1,700 kilotons by 2027.

GM makes EVs push

Speaking of electric vehicles, last month we noted General Motors’ announcement regarding its intention to invest nearly $800 million to convert an existing plant to manufacture EVs.
GM referred to the investment as what would be “Canada’s first large-scale commercial electric vehicle plant.”
“Subject to ratification of a tentative 2021 agreement reached with Unifor and confirmation of government support, General Motors plans to bring production of its recently announced BrightDrop electric light commercial vehicle, the EV600, to its CAMI manufacturing plant in Ingersoll, Ontario,” GM said.
“The nearly $800 million (1 billion Canadian dollar) investment will support GM’s timing to deliver BrightDrop EV600 in late 2021. The investment will enable GM to convert CAMI into Canada’s first large-scale electric delivery vehicles manufacturing plant.”
In addition, GM recently announced it intends to reach carbon neutrality in its operations by 2040.
The automaker plans to offer 30 new all-electric models by mid-decade, another marker of the coming electrification of automotive sales.
Furthermore, GM said it aspires to eliminate tailpipe emissions from all of its new light-duty vehicles by 2035. That’s a major announcement for the US’s largest automaker by sales.

Supply chain realignment

Announcements and action —not to mention execution — are different things. However, GM is taking steps to narrow the sizeable gap between it and Tesla in the EVs market.
The shift toward electric vehicles, however, will lead to a significant realignment of supply chains. In turn, that means a very different automotive sector from the one that currently exists.
In a November 2019 report, PwC speculated on the future of vehicle components in a world where electric vehicles account for a larger and larger share of automotive sales.
“PwC Strategy anticipates that the share of a car’s value attributable to the powertrain and electronics will rise significantly by 2025, to a combined 52% from 44% in 2015, at the expense of the chassis, body, and interior components, driven in part by a shift toward EVs (increasing in-car connectivity and advancements in driver-assist technology are also factors),” PwC explained. “The lithium-ion battery pack alone can account for up to 50% of the value of today’s EVs.”

Actual metals prices and trends

The US’s economic recovery still has a long way to go. However, if stimulus measures and vaccination efforts are able to stabilize the economy, automotive sales are likely to benefit.
As for key metals in the Automotive MMI basket, the US HDG price jumped by 18.0% month over month to $1,377 per short ton as of Feb. 1.
Meanwhile, LME three-month copper ticked up 1.5% to $7,874 per metric ton.
US shredded scrap steel gained 1.4% to $459 per short ton. The Korean 5052 aluminum coil premium fell by $0.01 to $3.48 per kilogram.
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