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Around the Tracks: Auto sector's H1 gains ride on low-base effect

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  • Clement Choo
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  • Battery Materials United States

Automakers reported higher year-on-year sales and production in the first six months of 2023, compared with year-ago figures when they were reeling from the effects of COVID-19 restrictions and tight supply of semiconductor chips and automotive parts.

Although several automakers saw chips supply ease, vehicle producers still faced supply disruptions for systems using semiconductors. Headwinds existed in the form of higher vehicle prices and weaker credit conditions. For instance, the US dealt with a mini-banking crisis while Europe had its dilemma with Credit Suisse.

China, India, EU and US were among the global auto markets to benefit from growing demand for electric vehicles. Automakers, especially in the US, continued to build up cooperation with suppliers of battery materials and secondary battery producers. Legislation such as the US' Inflation Reduction Act and the EU's Critical Raw Materials Act will influence the plans of the automotive and battery industries, together with changes in the geopolitical sphere.

Forward gear: Easing chip shortage, electric vehicle/battery plant signings

Reverse gear: Cautious buying amid economic uncertainty


The chip shortage will affect automakers over the second half of the year. Demand for electric vehicles could slow down as consumers -- concerned about inflation, slowing economic growth, foreign exchange volatility, threats of a recession -- are likely to be more cautious when it comes to buying new vehicles.

The ongoing war between Russia and Ukraine is likely to uncover more negative effects for the auto industry as built-up demand caused by the chip shortage is fulfilled.

Steel demand will remain weak while steelmakers with surplus production will export their excess to prevent a glut in their own domestic markets.


Light-vehicle sales in June grew 20.8% year on year to about 1.39 million units, data from S&P Global Mobility showed, which brought H1 sales to about 7.71 million units, resulting in a 12.4% annual rise. Amid the positive figures, mixed signals from consumers have led to uncertainty over sales for H2. Over January to April, EVs accounted for 6.9% of all new vehicle registrations in the US, S&P Global Mobility data showed, as sole EV registrations surged 67% year on year to about 341,500 units over the four months. A late-June report from the US Joint Office of Energy and Transportation estimated that by 2030, between $31 billion and $55 billion of investment is needed to build up charging infrastructure to support 33 million passenger EVs.

Under the spotlight

  • H2 outlook unclear amid cautious consumers.
  • Increased emphasis on ex-China battery supply chains.
  • US Domestic EXW Midwest prices for cold-rolled coil stood at $1,267.66/mt at the end of Q2, down 17.9% from Q1.


Passenger vehicle registrations in the European Union in H1 rose 17.9% year on year to 5.44 million units, according to data from the European Automobile Manufacturers' Association (Association des Constructeurs Européens d'Automobiles, or ACEA). The six-month total was summed up after registrations in June rose 17.8% to 1.05 million units, marking 11 straight months of increases. It is important to note the low base of comparison due to a semiconductor shortage crisis at the start of 2022. Registrations in H1 2022 were down 14%, ACEA data showed. In related news, the European Commission is aiming to advance plans to implement changes to the rules of origin for battery electric vehicles built and shipped between the UK and EU. Although the vehicle market in the EU has improved in June and the year to date, it remains low in relative terms.

Under the spotlight

  • EU automakers struggle to return to pre-pandemic levels.
  • Sales in 2023 to be lower than 2015-2019 average.
  • Northern European CRC prices tumbled to $843.54/mt at end-June from $1,024.47/mt at end-March.


China ended H1 with production and sales of automobiles at 2.56 million and 2.62 million units, respectively, China Association of Automobile Manufacturers' data showed. Year on year, the former was up 2.5% while the latter gained 4.8% against June 2022. With the June data summed up, H1 production and sales stood at 13.25 million and 13.24 million units, respectively, up 9.3% and 9.8% from H1 2022. But the H1 gains were not as promising as they sounded as COVID-19 restrictions last year caused H1 2022 production and sales to fall 3.7% and 6.6% against H1 2021. Still, new-energy vehicles, or NEVs, were vital contributors to the production and sales figures. NEV production and sales in June reached 784,000 and 806,000 units, respectively, surging by 32.8% and 35.2%. As a result, H1 production and sales of NEVs totaled 3.79 million and 3.75 million units, respectively, posting spikes of 42.4% and 44.1%. In support of its NEV industry, Beijing will exempt a purchase tax for NEVs for 2024-25 and halve the tax for 2026-27.

Under the spotlight

  • Government measures to support NEV producers.
  • Chinese economy faces deflation as consumer demand tanks.
  • China challenges Japan as world's leading auto exporter.


India produced 331,862 passenger vehicles in June, a 2.4% rise year on year, data from the Society of Indian Automobile Manufacturers showed, a smaller increase compared with a 16.4% rise in May. Similarly, passenger vehicle shipments to dealers grew 1.6% in June 2023 to 280,252 units while exports grew 2% to 57,618 units versus June 2022. With the June data summed up, production and export of passenger vehicles over April-June stood at 1.14 million units and 152,156 units, respectively. The output was up 7% while the exports were down 5% from the same period in 2022. Vehicle sales in stood at 1.86 million units, up 9.6% year on year but down 8% month on month, data from the Federation of Automobile Dealers Association showed. FADA said that the passenger vehicle segment faced inventory pressure and a demand-supply imbalance. Vehicle sales in H2 2023 could be affected by Real Driving Emissions (RDE) norms, which took effect in India on April 1, due to higher vehicle manufacturing costs incurred to meet the norms.

Under the spotlight

  • India plans to build local chip infrastructure.
  • Vehicle exports fall amid fluctuations in foreign currency.
  • Domestic HRC EXW Mumbai prices were about $676.88/mt end Q2, down about 6.5% from about $723.69/mt at end Q1.