When I took my 1999 Saab into the shop last year, the service manager told me I would need more than $4,000 in repairs. It was time to trade it in, especially considering it had more than 150,000 miles on the odometer.
That’s pretty much what’s happening nationwide as car owners find they can’t afford to keep their old clunkers going any longer. The average age of the U.S. car fleet reached a record 10.8 years in January, according to Polk Automotive Intelligence.
That’s driving strong sales by Detroit’s Big Three automakers. It’s also fueling the double-digit growth in imports of containerized auto parts to build cars in the dozens of plants European and Asian brands have constructed in the U.S. over the last decade.
Honda, for example, is building new plants or expanding existing plants in Alabama, Indiana and Ohio, and investing $800 million in a new plant in Mexico. Nissan, which exports its U.S.-made models to 46 countries, expects to triple its U.S.-made auto exports in the next two or three years.
“We’re getting more production localized here because the Japanese and the Europeans and the Koreans want to get away from currency fluctuations,” said George Magliano, senior principal economist for IHS Automotive. The foreign automakers produce cars on common platforms shared among different models manufactured at plants worldwide. “So they are looking to do global car platforms, which enable them to shift production here and export from here,” Magliano said.
North American sales of light vehicles increased 9.5 percent last year to 12.7 million units. IHS Automotive forecasts light vehicle sales will grow almost 15 percent this year as the U.S. economy builds on its recovery. This sales growth will fuel growth in imports of auto parts, especially from Mexico, where many U.S. and foreign automakers have set up plants to feed North America and growing consumer demand for autos in South America.
“Containerized auto parts imports will continue to post gains in 2012, and likely in 2013,” Journal of Commerce Economist Mario Moreno said. “The pace of growth may not be as large as seen in 2011, but will be respectable.”
Containerized auto parts imports grew 24 percent last year to 634,204 20-foot equivalent units, a big jump by any measure, but still much slower than the 39 percent growth in 2010. That’s because Japanese automakers’ supply chains, especially those of Toyota and Honda, were curtailed severely by the earthquake, tsunami and resulting nuclear disaster at Fukushima in March, and the summer flooding in Thailand. That put a damper on overall growth.
Auto parts imports in the first quarter of 2012 increased 14 percent over the first quarter of 2011. Though strong, the increase was much smaller than the 33 percent year-over-year surge in last year’s first quarter, before the full impact of the tsunami hit Japanese automotive supply chains.
Containerized auto parts exports grew 10 percent in 2011 to 242,835 TEUs, lagging 2010’s 26 percent year-over-year growth. The slowdown was caused by Europe’s slide into recession as austerity measures took hold and put a damper on consumer spending.
Nevertheless, Moreno expects auto parts exports to be modestly positive in 2012, in the single digits, as U.S. automakers ship parts to their overseas plants. “Ford just opened a $450 million plant in Thailand to better serve a growing Southeast Asian market,” he said. “In my view, this will support U.S. exports of auto parts going forward; however, this can be greatly offset by a stagnant European economy.”
North Europe’s demand for U.S. auto parts began to decline in the second quarter of 2011. “It appears volumes will not pick up any time soon, given high unemployment and a retrenched consumer,” Moreno said.