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 Title Peak vehicle sales have passed, only minor dip ahead
 Name 일반관리자  Date of Registration 2018-11-04
 Email  Hits  15
 Source www.plasticsnews.com, 편집 handler
General Motors Corp.Workers assemble an electric, autonomous Chevrolet Volt.

The seasonally adjusted annualized rate for total motor vehicle sales in September was 17.4 million units, according to Autodata Corp. This was a solid gain when compared with the previous two months, and it was the best month so far this year. Despite this solid gain, the total for September was still 4 percent below the total from the same month a year ago.

That's because, for the second straight year, the September sales figures got a boost from post-hurricane replacement sales. Last year, Hurricane Harvey devastated the Houston area and destroyed a lot of vehicles in the process. This year, it was Hurricane Florence hitting the Carolinas that caused the damage. The larger size of the storm last year, combined with the greater population density of the area affected, resulted in more cars destroyed in Harvey than in Florence. Thus, the impact to the monthly sales data this year was smaller.

Looking past the hurricane effects, the total sales data has gradually trended downward this year, and I expect this to continue through 2019. In the coming quarters, demand for motor vehicles will get support from a tight labor market, rising wage growth and high levels of consumer confidence.

In opposition to these forces, demand will be restrained by rising interest rates, higher fuel prices, higher prices for new vehicles and some tightening of lending standards corresponding to the gradual rise in delinquency rates. The forecast calls for total sales to decline by 2 percent in 2018 to a total of 17 million units, and then another 5 percent in 2019 to a total of 16.2 million units.

A more important statistic to both domestic molders of plastics parts and the mold makers who supply them is the number of motor vehicles and parts that are manufactured in the U.S. The recently negotiated trade deal with Mexico and Canada changes the "country of origin" rules by raising the percentage of domestically produced parts in a car to 75 percent in order to obtain duty-free status.

President Donald Trump touts this as a way to increase jobs and investment in the U.S. auto industry, and in theory, this would be good for the industry. But it is likely to raise the price of new vehicles as well, and this could restrain demand. It remains to be seen what the net effect will be, but there are indications that if the 75 percent rule starts to inhibit sales more than anticipated, then the requirements could be adjusted.

In terms of the current trend, total year-to-date U.S. assemblies of motor vehicles are running just slightly below the pace from last year. My forecast calls for a modest decline of 1 percent in the assemblies total in 2018, but rising costs and declining demand will push the assemblies total down 4 percent in 2019. While my forecast for demand for plastics parts has been nudged upward a bit as this year has progressed, but I still believe that overall demand for motor vehicles, parts and tooling in the current recovery cycle peaked in 2017.

It probably goes without saying that the recent trade deals and steel tariffs have added a lot of complexity to the forecast for business conditions for mold makers. Trump advocates that these deals will ultimately be better for North American mold makers in the long run, and he might be right. But I have to believe that in the near-term, the results will be mixed at best.

For starters, we are likely past the peak in the capital expenditure cycle, and nothing Trump does will change this situation for the current cycle. The best illustration of why I think capex will decline for the foreseeable future is the trend in corporate profits for the motor vehicle industry.

The downward trend in the profits chart began long before the recent trade deals and tariffs were a factor. We have had two quarters of lower corporate taxes, but so far, this has not changed the trajectory of the profits curve. Profits drive investment, and the decline in profits over the past couple of years is already starting to show up in the demand for new molds and tooling.

My research indicates that investment in new molds and tooling from the motor vehicle sector peaked in the early part of 2017, and the year-to-date total for 2018 is noticeably lower than it was for the same period last year. My forecast calls for the rate of decline in capital spending to moderate next year, but it remains to be seen whether we are near the bottom of the current capex cycle. As I said, there are a lot of new moving parts in this forecast.

The near-term trade and tariff situation notwithstanding, there are at least three major market developments just over the horizon. They are electric vehicles, autonomous vehicles and ride-sharing services. Obviously, any of these has the potential to become a huge disruption to the industry. My best forecast as to the time frame in which such a disruption will happen is greater than two years but less than 10.

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