April Vehicle Assembly Rate Collapses, May Industrial Production Estimates To Be Cut

Tyler Durden's picture

As if today's disappointing announcement of slowing Industrial Production was not enough for all those still hoping for a hockeystick to the economy, we now get an update from Stone McCarthy which looks at the latest Wards Automotive data and sees what apparently nobody has factored into their models yet. In a nutshell, the annualized April motor vehicle assembly plunged at a 12% rate from 8.923 million in March to just 7.847, the lowest reading in all of 2011. From SMRA: "In the past, such a sizable drop in the assembly rate has usually translated into a sharp decline in motor vehicle output. We project motor vehicle output to decline by 9% in April, which would be entirely consistent with the drop-off in the assembly rate." The immediate impact: the drop in the industrial production already seen, but the bulk of it due to delayed aftereffects will likely impact the May number, as the follow through from the Japanese supply chain halt starts ringing a loud alarm bell across Wall Street. Of course, this is another thing that all those calling for a 4% H2 GDP could have absolutely not foreseen (and in fact it was originally supposed to be positive for the economy, eh Deutsche Bank?). Expect to see drastic downward cuts to May Industrial Production and next, to Q2 GDP.

And for those curious, here is Goldman's inability to spin today's Industrial Production in a favorable way.

Industrial production flat in April (mom) vs. GS +0.5%, median forecast +0.4%.


1. US industrial production stalled in April, due to a sharp decline motor vehicles and parts production (down 8.9%). This decline appears to be the effect of supply-chain disruptions resulting from the natural disasters in Japan. Overall manufacturing output declined by 0.4%, while output of manufactured products excluding motor vehicles and parts rose by 0.2% Together with downward revisions to previous months, these figures imply that the annualized three-month growth rate of manufacturing output excluding vehicles slowed from 8.4% in January to just 1.8% in April.

2. Mining and utilities output both increased (by 1.7% and 0.8%, respectively). The capacity utilization rate fell to 76.9% in April from 77.4% in March.


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Ray1968's picture

Could $5/gal gasoline have anything to do with this?

Obama energy policies are killing the industry he tried to save (with our tax dollars)

jus_lite_reading's picture

Industrial Production was down due to unusual amounts of pollen. People sneezed and stayed home.

zaknick's picture

Mad Max Beyond AmeriKKKa here you go!!

Fascist Implosion, bitches!

Amerika: the KKK/bankster empire ends in tears!

smlbizman's picture

bullshit i say...gm is is selling like a billion cars a week.....look it up....i just cant find the title info or registration info at my local dmv....

andybev01's picture

Yes but the sun also shone; double whammy!

Slash's picture

whatever happened to Hugh Hendry or whatever? wasn't he doing something with Japanese steel producer CDS's or something? did he get killed or make a killing?

Clorox Cowboy's picture

Were there 4 Tuesdays or 5 in April?  Trust me that will make all the difference...it's the newest thing in seasonal adjustment circles.

francis_sawyer's picture

They don't build 'em like they used to...

disabledvet's picture

"and our re-election campaign slogan is now officially underway"--(clapping, camera flash bulbs popping, magical line sheet wisked off white board) "yes i give you...i give you...A PICKUP TRUCK IN EVERY DRIVEWAY!  Questions please, questions.  Yes, not all at once, not all at once. You there, you there!  What say you?  Why not a "chicken in every pot" you ask?  Well, well....

francis_sawyer's picture

"A PICKUP TRUCK IN EVERY DRIVEWAY!  Questions please, questions.  Yes, not all at once, not all at once. You there, you there!  What say you?  Why not a "chicken in every pot" you ask?"


These days, it's more like...

"DRIVE-A-WAY & PICK-UP your chicken basket from Popeyes"...



disabledvet's picture

"we can do that too! gas cards and Popeyes.  next question please.  you in front--what say you?"

mayhem_korner's picture

They don't need to build any more cars anyway - they're stacked 4 high at the dealer lots.  It's worse than the shadow inventory of RE.

Rainman's picture

....and the price on used cheaper cars is taking off. Used car dealers can't get cheapies at the auction because dealer's aren't getting trade-ins and cash for clunks took a lot of good merchandise off the road for destruction. Po folk get the camshaft again !!

TheTmfreak's picture

Not to mention as regulations increase car costs continue upwards. Some aren't "safe enough" so they can't be imported. Like that indian car that was like 2k new.

NotApplicable's picture

Not to mention that lots of cheap used cars were shipped overseas back when everyone was getting 5-6 yrs dealer financing @ 0% with an employee discount to boot. Never mind how many years forward that pulled demand.

At least the parking lot in the otherwise empty bowling alley (next to the brand new Nissan dealership) stays full now.

Heck of a job, Bernanke!

jkruffin's picture

It is plainly obvious how to kill this ponzi scheme once and for all. 

Short the SPY to hell, and Short the hell out of the EUR/USD and Benny's ponzi is over and collapsed.

francis_sawyer's picture

"It is plainly obvious how to kill this ponzi scheme once and for all..."


Buy PHYSICAL everything, with FRN's...

jkruffin's picture

Yes, I should mentioned that you buy PHYSICAL with the fiat profits from the shorting

francis_sawyer's picture

That's "the Morgue's" strategy with silver...

Granny's tea set is halfway out of the cupboard already...

LawsofPhysics's picture

This is all about the collapse of Japan's economic engine, period.  GM would keep stuffing the pipeline if they had the parts.  Who needs customers in a ponzinomic system such as ours?

cougar_w's picture

Even though I understand the origin of the term, we have to stop calling these "black swans". They are too big and lethal to be swans anymore.

I vote for "black pteranodons"


mynhair's picture

Black monkeydons as found in Wizard of Oz.

RobotTrader's picture

They are celebrating this news by:

- Bidding up WFC by 3% (the "Fix Is In" on the banks, as of today)

- Jamming COF, AXP, DFS up to new 3-year highs.

- Pushing "Grandma" utility stocks up to new highs for the move (thanks for ZIRP)

Tyler Durden's picture

As we said yesterday, we believe Utility stocks will subsantially outperform from here on out as part of the great QE unwind compression trade.

Muir's picture

and spot on

That and your analysis of the FEDs put selling on Tres were the best Financial analysis anywhere this year.


LawsofPhysics's picture

Yep, people still need water and power.  Well some do.  Folks in my neck of the woods are pretty "self reliant".  How long before that phrase gets wiped from existence by TPTB?

Tyler, where can I find more info on utility stocks the represent mostly communities in non-broke states?

Spalding_Smailes's picture

QE unwind ??? Who would have thunk it ..... Lol .... Not the bears or the doomers' I guess ....



The amount of freight carried by the for-hire transportation industry increased 1.9 percent in March from February to reach the highest level since July 2008, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics’ Freight Transportation Services Index released Wednesday, May 11. The March increase followed a decline in February.

BTS, a part of the Research and Innovative Technology Administration, reported that shipments measured by the Freight TSI rose 15.1 percent over the last 23 months, starting in May 2009, after declining 15.7 percent in the previous 16 months beginning in January 2008. Freight shipments have increased in 17 of the last 23 months. Freight shipments in March (108.6 on the index) rose 15.1 percent from the recent low in April 2009 (94.3) when freight shipments were at their lowest level since July 1997.

Freight shipments reached a 33-month high in March despite a slight slowdown in the rate of growth in the beginning of 2011 compared to the end of 2010. For the first three months of 2011, freight shipments measured by the index were up 1.3 percent following a 2.1 percent increase during the final three months of 2010. The first quarter of 2011 saw the seventh consecutive quarterly increase since the second quarter of 2009.





SoCalBusted's picture

Yes indeed, DUK is doing well for me and I got lucky with ICO

francis_sawyer's picture


Why don't you do something useful by crunching those observations into a thesis or prediction and telling us why it's relevant...

I can go to FINVIZ.COM to see what's green, or just listen to Bob PISS ON ME


disabledvet's picture

"yes, yes.  i am peering into my creestal skull--i mean BALL, crystal BALL--and i'm seeing something here--yeessss, 'cloudy with a chance of rain.'  Yep, it's official.  50/50 chance of pretty much everything."

francis_sawyer's picture


In the 'Rocky' Mountains... CLOUDY

In the 'Cloudy' Mountains... ROCKY


mynhair's picture

This must be bullish for stocks:  all those resources able to be used...err..elsewhere?

kito's picture

whats the big news here? every automaker already warned of limited production. its NOT due to anticipated lack of demand, as in 2008, so what is the point of this article?

Tyler Durden's picture

The point is to demonstrate the endless divergence between reality and (future) perceptions. What was consensus for April IP, where did it come? What is consensus for May IP, and where will that come. Also, one may be surprised that IP does impact GDP, and thus fiscal, monetary and other general bailout policy.

Does that answer your question?

Muir's picture

or if he needs weighty, cumbersome explanations of the wide spread phenomena that are "predictions" refer him to Talib 

LawsofPhysics's picture

Yep, in general most things "paper" starting to detach from anything real.  Successful investing is not a race to the bottom and I appreciate ZH's help.

kito's picture

thanks for the response. although i think most would agree that any effect on gdp due to supply issues actually is (for lack of a better phrase) a transitory issue.

d00daa's picture

Please explain this robust consumer "demand" for new vehicles, that doesn't include dealer channel-stuffing.

Thanks in advance.