Auto parts suppliers’ optimism—initially fuelled by the US-Mexico-Canada agreement’s (USMCA) ratification—has given way to consternation over poor vehicle sales, according to the Original Equipment Suppliers Association’s (OESA) Supplier Barometer outlook for Q1 2020.
The Supplier Barometer outlook improved by 10 points to an overall score of 47, but remains three points below the average neutral sentiment rating of 50.
The optimism, according to the OESA, comes from smaller firms with revenues below $150mn that have less exposure to global trade trends. However, large firms have pessimistic business outlooks for the year, the association added.
In fact, poor vehicle sales supplanted government policy as the top threat facing the industry, according to suppliers surveyed by the OESA.
Covid-19’s spread is also weighing heavily on the minds of auto parts suppliers. The virus’s spread in China caused the barometer’s “risk from an international event”sentiment to rise significantly compared to previous quarters.
Most suppliers surveyed in Q1 2020 said their production capacities were flat at 80pc—the same as a year ago—while they expect their break-even levels of production to increase to 15mn units in 2020. Around half of the supplier surveyed said their inventories rose in 2019, albeit at a slower rate compared to the previous year.
The OESA quarterly supplier barometer gives insights into business sentiment among auto parts suppliers.