Supplier confidence still positive, auto suppliers still skeptical

According to the quarterly SupplierBusiness Confidence Index released on Aug. 23, suppliers to the automotive industry continue to be concerned about the long-term strength of the recovery and its stability, in spite of industry growth. Overall though, positive trends remain in place among suppliers, with all four elements of the index—New Orders, Production Volumes, Inventory levels and Employment—scoring over 50, suggesting they are in an upward trend.

Suppliers were asked for commentary on the orders and production, and responses made it clear that confidence is increasing with suppliers, with volumes appearing to stabilize. “However, there continues to be uncertainty as to whether this is due to inventory levels being so low that suppliers have spent the last six months catching up, or if there is genuine sustained growth in this sector,” said the report. “The acid test will come in the fourth quarter of 2010 and into 2011.”

In Europe, after results plateaued in the previous index, there now seems to be a greater fluctuation in the individual elements of the survey, as show by the fact that the growth of Production Volumes has been halted in the months since April. But, the report questions whether this is just “part of summer malaise” or a greater problem for suppliers in the region. The good news for European suppliers is that there is increasing growth in the Employment and News Orders segments of the index. “New Orders in particular represents the earliest indicator of whether supplier confidence is strong or waning in our index and its continued strength suggests suppliers are remaining positive over the future at the moment,” said the analysis.

“In North America, the overall numbers stayed at roughly the same level, with greater solidity than in Europe. Inventories continue to grow at the fastest rate, and though the Production Volumes segment has fallen slightly, the New Orders segment remains strong,” according to the data analysis. “For the first time in the short history of our survey, the overall confidence index is greater in North America than it is in Europe.”

               July 09        Oct 09        Jan 10        April 10    August 10
________________________________________________________________________
Europe        52.8         61.6           68.4            69.0          69.0

North
America      49.2         61.6           62.9            68.9          70.4

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