Suppliers of car components reported surging summer sales as the auto industry continues to recover from the slump triggered by Covid-19 lockdowns earlier this year.
Makers of rearview mirrors, steel and air bags detailed increased business because of auto makers looking to make up for production lost during pandemic lockdowns. Adding to the tight inventory, buyers have been returning to showrooms faster than expected as customers see a need for personal vehicles.
“During the third quarter, volumes increased so quickly that it became very difficult for our operations teams to keep up,” said Steve Downing, president and chief executive of components maker
, whose products include rearview mirrors. Gentex on Friday posted a rise in third-quarter profit on sales of $474.6 million, its second-highest quarterly figure ever, behind only its sales in the year-earlier period.
The relatively healthy financial position of many consumers during the pandemic, as well as Covid-19 stimulus checks and auto companies’ zero-percent financing offers, helped lift orders, said Charles Chesbrough, senior economist at Cox Automotive Inc.
“That kind of jump-started things in the early days of the recovery, and now I think we’re just seeing that the industry is kind of catching up on the short-supply situation we had over the summer from the factory shutdowns,” Mr. Chesbrough said.
flat-rolled steel shipments rose 80% to 1.1 million tons for the third quarter, an increase driven by the auto market, said Lourenco Goncalves, chairman, president and chief executive of the steel-and-mining company. Its sales nearly tripled to $1.65 billion, more than 70% of which came from the auto market, he said Friday.
Mr. Goncalves attributed the market’s strength to the need for personal vehicles as city dwellers have flocked to the suburbs during the pandemic.
“The recovery in car sales is consumer-driven and shows no signs to end any time soon,” he said.
Sales at many auto makers are still down from a year ago, but analysts said the selling pace in September was closer to what it was before the pandemic brought business to a near-standstill this spring. Investors will get a better sense of how well car companies did when they start reporting their quarterly results, including
Ford Motor Co.
and Volkswagen AG next week.
Global light-vehicle production in the July-to-September quarter fell 3.5% from a year earlier, improving from the 43% decline in the previous quarter, according to
IHS Markit Ltd.
The firm expects production to fall 2.7% in the current quarter.
Mikael Bratt, president and chief executive of air-bag maker Autoliv Inc., said, “The worst demand decline on record in the second quarter was followed by a faster-than-expected recovery in the third quarter, with its challenges of managing the supply chain in a safe and efficient way.”
The Swedish company recorded higher profit and sales for the third quarter on Friday and expects the improvement to carry over to the current quarter. Its sales in North America rose around 2% on a comparable basis, thanks to recent launches by customers such as
Toyota Motor Corp.
, Mr. Bratt said.
Still, production trends are tenuous as some regions are seeing a resurgence in Covid-19 cases.
“Economic uncertainty, risk from further lockdowns and the risk of increasing unemployment and its impact on the consumer demands may temper the outlook for the fourth quarter net vehicle production,” Mr. Bratt said.
Now that supply chains and manufacturing capabilities have been largely restored in the auto industry, the recent bump in production should normalize in the coming period, said Mark Fulthorpe, executive director for the automotive team at IHS Markit.
“What we’ve seen in the third quarter looks very, very robust, but this is part of a recovery cycle,” Mr. Fulthorpe said. “There will be some kind of adjustment down.”
Write to Dave Sebastian at [email protected]
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