Auto Manufacturing Index: Outlook hurt by chip shortage

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Just as the global auto industry is beginning to recover from the coronavirus pandemic, another crisis involving a shortage of semiconductor chips has surfaced in early 2021, raising concerns about the sector’s productivity.

How badly will car makers fare? For how long? Which companies will suffer the most? 

The answers to those questions have broad implications, considering the significance of the auto industry. Car factories employ millions of people worldwide. A significant drop in sales and revenue could result in painful layoffs, impact GDP growth and delay economic recovery.

It’s possible to track this story and the global automotive industry, in general, with a new index developed by Ursa Space using radar satellite imagery.

Our Auto Manufacturing Index (AMI) captures vehicle production trends that can be used to analyze car maker performance and discover macroeconomic signals. 

For more information, you can watch a short video or check out a story map explaining some of the recent insights using the AMIs. 

We’re monitoring activity at dozens of auto plants around the world, including the following countries: 

  • Americas: Brazil, Mexico, United States
  • Asia: China, India, Japan, South Korea
  • Europe: France, Germany, Italy, Russia, Spain, United Kingdom

By manufacturer, the list covers: BMW, Changan, Fiat, Ford, GM, Hyundai, Jaguar Land Rover, Kia, Nissan, PSA, Renault, SAIC-GM, Tesla, Toyota, and Volkswagen, among others.

With over 5 years of historical data, a baseline is established to know whether current levels are higher or lower than normal. 

Similar to the Purchasing Managers’ Index (PMI), a closely-watched economic indicator, a score of 1 is an important threshold. An AMI greater than 1 denotes above-average production levels, while less than 1 suggests below-average production levels.

A look at various AMIs illustrates how the auto industry’s performance in 2020 differed depending on the country, as the pandemic spread unevenly across the globe.

All countries were negatively affected, though some bounced back (China, Germany, US) by the end of the year, while others (Brazil, India) had not. 

The graphs below show country-specific AMIs with the bars color-coded based on a spectrum ranging from relatively high (blue) to relatively low (red). 

China Dashboard

  • China’s AMI suggests a V-shaped recovery occurred over the first half of 2020.
  • The index fell sharply from January to mid-March, and then bounced higher starting mid-April.
  • China’s AMI fluctuated in the second half of 2020, but remained above 1.0 indicating above-normal levels. 

Germany Dashboard

  • Germany’s AMI declined March-April 2020 as Europe experienced the first wave of coronavirus cases.
  • The index rebounded to pre-lockdown levels by June, though another V-shaped trajectory (down/up) occurred late summer.
  • Germany’s AMI climbed in September/October and stayed above 1.0.

US Dashboard

  • The US AMI fell starting in March 2020 as auto plants closed for safety reasons.
  • The index bottomed in July at 0.82, and began to recover in August/September.
  • The AMI increased in Q4 2020, pushing above 1.0 in November/December for the first time since February.  

Brazil Dashboard

  • Brazil’s AMI was stable in Q1 2020, but a decline in April brought the index below 1.0. 
  • The AMI hovered slightly above 0.9 for most of the summer, before taking a nosedive in August that accelerated in early September.
  • The index failed to rebound in Q4 2020, dropping to fresh lows in late December.

India Dashboard

  • India’s AMI began 2020 at less than 1.0 and failed to break above that threshold even in March/April when the index rose slightly.
  • A gradual decline from May-June morphed into a steeper drop in July-August.
  • The index weakened further in late 2021, barely staying above 0.6 at the end of the year.

If you’re interested in the product, we’d love to have a chat.

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Geoffrey Craig