The Original Equipment Supplier Association’s newly released May 2012 “Supplier Barometer” report shows a slight decrease in the supplier sentiment index, which fell from 64 in March to 60 this month. While this represents the lowest level since November 2011, when the supplier index dropped to 52, a level of 60 is still considered neutral.

Following are some highlights from the May OESA Automotive Supplier Barometer report:

  • A poll of 108 survey respondents showed the number of those who describe themselves as “somewhat more optimistic” decreasing by 8%—down from 53% in March to 45%—while those categorized as “somewhat more pessimistic” increased by 7% in May—up from 1% in March.
  • Feedback from Ford and Chrysler specifically continue to be positive. Toyota sales are also on the rise.
  • The stable sentiment driver is the continued increase in North American vehicle production. North American light-vehicle production through the first quarter of 2012 is up nearly 17 percent, compared with the same quarter in 2011. North American production in the second quarter is expected to increase nearly 20 percent from last year, with more than 3.6 million units expected to be built (the second quarter of 2011 was affected by supply disruptions due to the Japan earthquake in March).
  • European financial concerns, pre-election stagnation, and material supply concerns at a key plastics manufacturer in Germany are keeping optimism in check. Note: none of the 15 affected respondents have seen a reduction in customer production schedules.

Based on the robust first quarter 2012 selling pace, which was 14.5 million units total and 11.7 million units retail, LMC Automotive is raising the light-vehicle sales forecast for the full year. The current forecast is now at 14.3 million units total light vehicles (up from 14.1 million units) and 11.5 million units retail light vehicles (up from 11.4 million units). An increase in fleet sales to 20 percent of total sales for the year is expected to outpace the increase in retail volume for 2012.

"Despite the lower selling rate in April, which was expected, we have raised our overall outlook for 2012 based on the high first quarter pace, improving economic variables and credit availability, as well as consumers replacing aging vehicles at a higher rate," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "However, automotive sales remain vulnerable, as the market faces yet another potential shock due to a fuel and brake line resin shortage caused by a plant explosion in Germany in March."

As a result of the resin plant explosion in March, real and substantial risk exists for future production and for automotive manufacturers may begin to slow the pace of build that has been in overdrive in recent months, Schuster explained. “More intensive production management in relation to product mix and inventory is expected to be a means to cope with the looming shortage.”

The complete May OESA Supplier Barometer Report is available online.