Issue: Apr 2006


CSM Automotive Production Barometer (APB) - April 2006



by John Larkin

CSM Worldwide, the leading provider of market intelligence and forecasting to the automotive industry, announces the April 2006 CSM Automotive Production Barometer. Released in advance of existing sources of information, this service provides an accurate record of light vehicle production for the previous month to assist automotive economists and financial analysts in their ongoing industry evaluations.

The CSM Automotive Production Barometer for April 2006 and release schedule is currently available via the CSM Worldwide website: http://www.csmauto.com/auto-production-barometer .

Light vehicle production in the United States picked up in March, increasing to a seasonally adjusted 11.41M units compared to a year ago. U.S. car production in March increased 1.5% over last year, though light truck output continues to lag last year's pace, down 3.8% in March versus a year ago and down 6.0% year-to-date on a seasonally adjusted basis. Actual unit production in the United States totaled 1.13M units in March, up 7.5% from 2005 levels with year-to-date output near even, up 0.1%, with last year's pace. North American production soared 10.9% over last March at a seasonally adjusted 16.58M units. Year-to-date production continues to outpace last year at 16.19M units, an increase of 4.7%.

All of the "New Six" North American auto manufacturers posted increased output compared to last year with the exception of Nissan, down 0.2%. General Motors Corp. and DaimlerChrysler recorded significant increases of 12.7% and 12.2% year-over-year, though last year's exceptionally weak results overstate these gains. New product launches at both GM and DaimlerChrysler, particularly the redesigned full-size SUVs for GM, are the primary drivers of the increase. Toyota, Ford Motor Co. and Honda recorded solid increases of 5.5%, 5.2% and 4.8% respectively during March 2006, though Ford is still weak considering last year's poor results.

Just as GM and DaimlerChrysler's gains are overstated, Nissan continues to languish, marking its fourth consecutive month of year-over-year declines. Nissan is facing strong year-over-year comparisons of double digit growth from incremental production of new vehicles over the past few years. In March 2005, Nissan posted a 25% increase in production over the previous year due to the Pathfinder being built locally instead of in Japan. The picture is expected to change in the second half of this year and in 2007 as Nissan launches several new and redesigned vehicles.

The trend of increased localization of vehicle production by expatriate auto manufacturers like Toyota, Nissan, Honda and Hyundai-Kia among others will become more prevalent over the next several years. Several factors are behind this increasing trend, but two key dynamics are at play in particular: Auto makers moving toward building what they sell in the same region and leveraging North America as a currency hedge.

Increasingly, these manufacturers are also looking to North America as an export base to serve other markets. Honda will begin exporting the Ohio-built Acura TL luxury sedan to China and Nissan will export the Mexican-made Versa/Tiida small car to several markets globally. Not to be outdone, GM and DaimlerChrysler are increasingly evaluating plans to more fully leverage their North American operations as an export base, such as the Dodge and Jeep brands in Europe and locally built Opel vehicles for export.

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