Circuits Assembly Online Magazine - Report: Auto Sector Can Only Cover 12 Days of Sales with Current Inventory Levels

BANNOCKBURN, IL – The US auto sector has historically maintained an inventory-to-sales ratio of nearly 2.4, says Shawn DuBravac, Ph.D., chief economist, IPC, in a report released today. That means under normal conditions the auto sector could cover some 10 weeks of sales with inventory on-hand. Today, however, inventory-to-sales for new vehicles is 0.389, which means the auto sector can only cover 12 days of sales with current inventory levels.

This year’s sales are 1.7 million vehicles below where they would have been without supply chain disruptions, DuBravac says, and sales will be about one million short next year.

In the US, third-quarter GDP was revised up one-tenth of a percentage point to 2.1%, compared to 6.5% in the first half of 2021. The largest positive contributions to growth in the quarter were inventories and consumer spending. Consumer spending grew 1.6% in the third quarter, compared to 12% in the second quarter. DuBravac still expects the economy to grow 4% in 2022, compared to expected growth of 5.5% in 2021.

He also expects economic growth of 5.2% in 2021 and 4.1% in 2022 in Canada; 5.9% in 2021 and 3% in 2022 in Mexico; 5.1% in 2021 and 4.1% in 2022 in the Euro Area; and 8% in 2021 and 5.1% in 2022 in China.

Auto production rose 8.7% last month. Output is off 2.7% from pre-pandemic levels. The industrial sector decreased 1.9% during the month, and is up 7.3% over last year and 2.7% compared to the start of the pandemic. The defense and space equipment sector grew 1.7% in November and is up 17% over 2020 and 20.6% over the last two years.

In the EU, manufacturing output dipped 0.4% in September and is up 4.8% over last year, but is down 1.2% on a two-year basis.

Other statistics of note:

Private-sector wages and salaries rose 0.9% in the US in October and are now up 10.5% in the past year.
Inflation was 6% in Germany in November, the highest level in 30 years.
The purchasing managers' index for China showed expansion in November (50.1), a hopeful sign some supply chain dislocations are easing, says DuBravac.