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NORTH AMERICA: "Autos: North America Production Seen Inflecting Higher in Q3 2015" report

NORTH AMERICA: "Autos: North America Production Seen Inflecting Higher in Q3 2015" report. 7-page report by BAIRD.

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back to index backAMERItalk June,  2017


Autos: North America Build Still Seen Above Expectations in Q2 2017 (download report)

North America production declined 9% yoy in April, due to two less build days yoy. Production schedules are still tracking toward +2-3% in Q2, above our estimate for 1% growth. We expect Q3 build to decline low single digits on GM platform changeovers, but believe the overall environment remains healthy. We continue to look for stable US demand on strong auto indicators (demand, employment, confidence) to support North America production at current levels.

- North America production declined 9% yoy in April, due to two less build days yoy. Positively, OEM production schedules still call for 2-3% growth in Q2, above our estimate for 1% growth. With total North America sales (including Mexico/Canada) near flat yoy and some overseas production shift to North America, we continue to believe that North America production environment remains healthy. We expect there to be inventory reductions next quarter, but believe this has been widely discussed and largely contained to GM (due to platform changeovers). We look for North America build to be roughly flat for the year. With the overwhelming belief that US demand has peaked and is moving lower, we see flat build as a positive versus expectations.

- Trucks continue to gain share. Truck segments declined 7% yoy with most segments down 5-10%. Car build fell 13% on 20-25% decline in mid-size cars.

- April production by the numbers:
----- OEMs gaining share: Subaru (+32%), VW (+23%), Hyundai (-4%).
----- OEMs losing share: Honda (-18%), FCA (-15%), BMW (-14%).
----- Production by country: Canada (-7%), Mexico (+7%).
----- Sales of alternative powertrains: Electric (+10% yoy, 1% of total), Hybrid (+8% yoy, 2% of total), Diesel (+10% yoy, 3% of total).

- Production schedules remain solid. North America production schedules ticked higher and now call for 2-3% growth in Q2. We believe there is likely strong build in anticipation of shutdowns in Q3. GM, in particular, has talked about taking multiple weeks of downtime during the summer for platform changeovers. While the OEM hasn’t identified the specific plants, we expect the K2XX platform to be one of the programs seeing downtime in anticipation of the platform re-fresh.

- Inventory levels modestly above normal. Domestic inventory levels declined one day sequentially to 84 days, modestly ahead of normal April level of 77 days. At current levels, domestic inventory levels are 100,000-150,000 units above normal levels. Roughly three-quarters of the higher inventory is due to excess inventory at GM cars, with the rest due to Ford Super-Duty.

To download 8-page report, please click here.

Source: BAIRD - GAI



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