Chart of the week
For several months, motor vehicle manufacturers have been adjusting their output to cope with electronic component shortages. To evaluate the overall state of vehicle manufacturing, we have built a monthly production data series for a set of automaker countries that account for just under 90% of global output. Our data uses the number of vehicles produced whenever possible and industrial output data for countries that do not publish vehicle numbers. We have also ensured all the data is seasonally adjusted.
The calculations indicate a steady fall in production since December. Although in autumn 2020, production had returned to the level that prevailed at the end of 2019, it was 10% lower by May 2021.
This fall in vehicle production is having a knock-on effect on new car sales, which have also fallen over recent months despite robust consumer purchasing power and a marked recovery in household confidence. The component shortage is likely to persist for several more months and will add to pent-up demand from deferred car purchases, boosting business in the years ahead.
In the US, where the situation has driven the price of used cars sharply higher and fuelled inflation, a return to normal in the used-car market is likely to be slower than expected. However, the delay could be a key disinflation factor next year.
The following opinion was written on July 8th 2021 and is susceptible of changing.
Sources : Bloomberg, and calculation from Lazard Frères Gestion
As of : 08th July, 2021.
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