woensdag 5 april 2017

Morgan Stanley Warns Auto Market Exhibiting "Classic Signs of Cyclical Fatigue"

Earlier this morning, Morgan Stanley's auto team, led by Adam Jonas, offered up a sobering redux of the March auto sales figures released yesterday. Here is a brief recap of Jonas' key takeaways (hint: volume down, incentives up, inventories up): March auto sales data (16.6mm SAAR vs 16.8mm LY) featured a number of classic signs of a late cycle: falling volume, rising inventory and rising incentives. A drop in used prices may complicate matters. Incentives are up 14.9% y/y (down 0.9% m/m) including a 15.0% y/y increase at the D3.Incentives among the Asian and European OEMs were up 16.8% and 9.9% y/y respectively. Days’ supply at the D3 overall is higher. GM days' supply is 97 days up from 71 LY. FCA’s days’ supply is down to 83 days vs. 87 LY. Ford’s days’ supply is 80 days this year, flat y/y.
*) And here is some of the data. While everyone tends to focus on total N.A. SAAR...


The 'retail' SAAR, which strips out sales to rental companies, paints an even more dire picture with consumer-driven volumes down 17% over the past four months...


Meanwhile, tanking sales volumes came despite massive increases in incentive spending versus last year...


But, poor sales didn't stop the D3 from maintaining production volumes which has caused inventory to balloon back to levels not seen since 2009 when sales volumes completely evaporated...


And that is the anatomy of a 'plateau'....