Inventory levels were pulled back after extremely aggressive production stoppages across Europe's major automotive assembly plants during December. Unfortunately, the majority of the unplanned stockpile built up since the early summer still needs to be worked off as we enter 2009.
The combined impact of a synchronised collapse of global export markets (which was particularly evident from November), domestic order levels running at least 20% off last year, and the negative inventory cycle means that vehicle manufacturers need to continue to take drastic action, the effects of which multiply though the supply chain.
IHS Global Insight monitors temporary plant idling and shutdowns announced by the car manufacturers across Europe. We calculate equivalent plant-days lost for the first quarter of 2009, as a result of the announcements made up to 21 January.
Plant Shutdowns and Projected Output Loss for Q1 2009 | |||||
OEM Group | Plant-Days Lost | Q1 2009 Projected Output | Actuals Q1 2008 | Reduction | Lost Prod - Units |
Honda | 47 | 29,779 | 80,922 | -63% | 51,143 |
Nissan | 32 | 63,702 | 103,817 | -39% | 40,115 |
Hyundai | 11 | 112,177 | 128,348 | -13% | 16,171 |
Toyota | 37 | 151,235 | 216,558 | -30% | 65,323 |
Daimler | 83 | 217,039 | 325,654 | -33% | 108,615 |
BMW | 51 | 254,823 | 349,789 | -27% | 94,966 |
Fiat | 97 | 309,956 | 384,049 | -19% | 74,093 |
Renault | 110 | 336,466 | 473,117 | -29% | 136,651 |
GM | 45 | 364,154 | 509,081 | -28% | 144,927 |
Ford | 65 | 454,745 | 610,536 | -26% | 155,791 |
PSA | 102 | 428,354 | 622,970 | -31% | 194,616 |
VW | 91 | 832,056 | 1,067,825 | -22% | 235,769 |
Others | 179 | 500,800 | 551,227 | -9% | 50,427 |
TOTAL | 950 | 4,055,286 | 5,423,893 | -25% | 1,368,607 |
In total, these announcements represent some 950 plant-days lost in the first quarter. This on its own would be responsible for a notional 16% slump in output. In reality, we believe that more plant idling will be announced in the coming weeks. At the same time, more limited action such as slowing line rates and truncating shift patterns are also needed in order to bring output down fast enough to meet the severe slump in orders.
As a result we forecast first-quarter vehicle production will contract 25% across the wider European continent, equating to a loss in the range of 1.3 to 1.4 million units in the first three months of this year alone. While production losses will be heaviest in the first four to five months of the year, we currently project a region-wide fall of 12% in light-vehicle production for 2009 as a whole.
by Francisco Camilher-Carvalho
francisco.carvalho@ihsglobalinsight.com