Strong new vehicle retail sales in 2011

Strong new vehicle retail sales in 2011
December 22, 2011





Good news for new vehicle retail sales. Consistent with their performance in November, 2011, new-vehicle retail sales continue to show strength.

According to a monthly sales forecast developed by J.D. Power and Associates Power Information Network (PIN) and LMC Automotive, December new-vehicle retail sales are projected to come in at 1,033,700 units. That is the first time retail sales will top 1 million units since the Cash for Clunkers program drove strong sales in August, 2009.

This volume represents a seasonally adjusted annualized rate (SAAR) of 11.2 million units. The company says Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

“Retail light-vehicle sales in December are performing well month-to-date, even as total incentive spending averages $2,700, down 10% from December 2010,” says John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “The industry has managed through another series of external shocks and is in a healthier position as the year closes.”

With December sales tracking as expected, LMC Automotive is holding its 2011 forecast at 10.3 million units for retail light-vehicle sales and 12.7 million units for total light-vehicle sales. LMC Automotive’s forecast for 2012 remains at 13.8 million units for total light-vehicle sales, but has been adjusted slightly upward to 11.3 million units (from 11.2 million units) for retail light-vehicle sales.

“For the third straight time, light-vehicle sales are posting strong selling rates at the close of the year,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Next year, the automotive industry will look to build upon the strong finish to 2011, but the real test in 2012 will be weathering a summer selling slowdown and posting a full year of a progressive recovery.”






India: Rubber Board head sees India FY12 demand below estimate
December 22, 2011





By Shilpa Sharma and Fatema Khokhar
MUMBAI – India’s rubber demand in 2011-12 (Apr-Mar) is likely to be lower: than the 977,000 tn estimated at the beginning of this financial year due to slowdown in the country’s economic and manufacturing growth, said Rubber Board of India Chairman Sheela Thomas.
“Consumption of rubber has been sluggish from August and is below the projected levels,” Thomas told NewsWire18 in an interview. In the first eight months of this financial year, the country’s average monthly consumption was 79,076.87 tn, lower than the projected 81,416.66 tn, she said.
Rubber is used extensively in automobiles, footwear, machinery and automobile spare parts industries.
India’s Apr-Nov consumption was 632,615 tn, up slightly from a year ago, showed data from the Rubber Board. In 2010-11, the country consumed 947,715 tn rubber.
High interest rates and surging raw material prices have slowed India’s industrial growth in the past few months. In October, the Index of Industrial Production contracted by 5.1%–its worst performance in more than two-and-a-half years–due to slowdown in capital goods, manufacturing, mining, and intermediate goods sectors. In the same month the previous year, industrial output growth was 11.3%.
Demand for rubber from sectors such as automobiles is likely to suffer.
The tyre industry is the biggest consumer of the commodity.
Recently, the Society of Indian Automobile Manufacturers said growth in vehicles sales is expected to remain almost flat this financial year. In October, the automobiles industry body cut its estimate of 2011-12 domestic car sales growth to 2-4% from 16-18% earlier.
Outlook on global demand is no better due to uncertainty in developed economies, Thomas said.
“World rubber consumption during Jan-Sep rose only 2.1% while in the previous year, the global consumption growth was 15.5% as markets were coming back from recession,” she said..
PRODUCTION OUTLOOK
India’s rubber output this financial year is seen rising 4.6% from the previous year to 902,000 tn as plantation area has increased nearly 4.0%, Thomas said. The output would have been higher if Kerala had not received heavy rainfall this monsoon season, she said.
During Apr-Nov, India produced 575,100 tn natural rubber, higher than 548,150 tn a year ago.
With more area coming under rubber plantation and good progress of re-plantation work, tapping is expected to increase this year, she said.
Area under rubber is seen rising to 737,000 ha in 2011-12 from 711,560 ha a year ago. The commercial life of a rubber tree is 32 years, including growth phase of seven years.
“We have taken extensive collaboration (with rubber growers) in northeast, Karnataka, Goa, Odisha, Maharashtra, West Bengal and Andhra Pradesh in order to increase rubber plantation in the country,” Thomas said.
Kerala and Tamil Nadu are the two major rubber producers of India. “We are hopeful of meeting the output target (of 902,000 tn) as January is our peak production time,” she said.
Production would rise in the coming months as the weather would be suitable for tapping, she said.

RUBBER EXPORTS
Despite the weakness in the rupee against the US dollar, India is not expected to export significant quantity of rubber this year as domestic prices are higher than international prices, Thomas said. “In Apr-Nov, we exported 20,784 tn rubber and have a target of 50,000 tn for the financial year 2011-12. But we may not be able to achieve it as our prices are higher.”
India exports rubber mainly in the form of latex, sheet, and block.
On Dec 14, the price of the RSS-4 grade rubber was 201 rupees a kg in the domestic market, higher than 181.77 rupees for a similar grade in the international market, she said.
Indian prices are higher despite the depreciation in the rupee against the US dollar, which makes the commodity cheaper for international buyers.
At 1225 IST, the Indian currency was at 52.6700 rupees a dollar. On Thursday, the local unit had hit a record low of 54.2925 rupees a dollar.
Thomas said the main reason for international prices being low is lower demand from China. Domestic consumption is nearly flat from the previous year, which has kept local prices firm. China is the world’s largest consumer of natural rubber.
International rubber prices came under pressure also because of the recent floods in Thailand, which disrupted car production in Asia and North
America, lowering demand for rubber. Besides, the debt crisis in Europe weighed on sentiment.Domestic prices are getting support also from expectations carryover stocks will be low, Thomas said. At the end of this financial year, the country’s carryover stocks are seen around 230,000 tn, down from 272,000 tn a year ago, she said.

Source: Geojit Comtrade Ltd