Global autos a mixed bag, but stronger overall

Auto production world wide is not unequivocally strong, with better than expected production in China tempered by moderating growth in the US and weak results in Europe and Japan.  Even so, production growth for the year as whole should be fairly good.  While I expect ~3.5%YoY growth, which is slower growth than last year, it is stronger than forecasters like IHS are expecting at present.

Q1 auto production actually looks like it was down a little, despite very strong results in China. Offsetting that was Japan, where comps where boosted in 2012 by subsidies on green cars that have now ended.

Japan and China probably present the most upside risk to full year auto production forecasts.  Production run rates in China have been ahead of expectations in Q1 which will likely prompt upgrades.  Japan has been poor, but the dramatic drop in the Yen will likely see things improve.

While more competitive Japanese producers are likely to take production from elsewhere, a weaker Yen should still be a benefit to overall auto consumption given the positive impact on the domestic economy, which is big and highly leveraged to a more competitive export sector.

US auto production and consumption is still solid, although is unlikely to repeat the huge increases seen last year. JD Power/LMC are expected solid sales in April of 12.1mln SAAR, which is on par with March.

The big deadweight, however, is Europe, where sales continue to slide at near double digit rates despite sliding heavily this time last year. Q1 light vehicle production is estimated to have fallen ~8%YoY.

With leading indicators suggesting activity is still declining, no one is holding their breath for a fast turnaround.  But with levels of production now at very low levels, the hope is the comps will get less negative for the remainder of the year.