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US Vehicle Sales in May: What They Mean for Alcoa Investors

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Jun. 9 2015, Updated 1:06 p.m. ET

May US vehicle sales

Alcoa (AA) counts the aerospace and automobile industry as its two growth pillars. As part of its transformation strategy, Alcoa is aiming to become a lightweighting powerhouse. It’s a pioneer in producing sheet products for the automobile industry. In May, US (SPY) (IVV) vehicle sales hit a decade high.

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Sales surge

The above chart shows the trend in US vehicle sales. Vehicle sales surged higher in May. They finished slightly short of an 18 million SAAR (seasonally adjusted annual rate). Most US automakers posted higher sales—with the exception of Ford (F). Ford’s sales declined 1% over last year. General Motors (GM) reported a 3% rise in sales over this period.

Ford’s sales were hit because it’s in the process of increasing the production of its best selling model—the F-150. The production of the new model is expected to be ramped up in the coming months. The new model has a full aluminum body.

Ford to ramp up F-150 production

This year, Ford has also reduced the summer downtime in a move to produce more F-150 trucks. Alcoa is one of the companies that supplied sheet products for the F-150 model. The production ramp up of the F-150 bodes well for Alcoa.

Alcoa expanded its capacity to serve the growing demand for auto sheet products. It also introduced a new manufacturing process for producing aluminum sheet. The patented technology, which Alcoa has named “Micromill,” will help Alcoa produce automobile grade aluminum sheets.

Alcoa appears to be placed well to capture automobile companies’ lightweighting needs. Meanwhile, the nonresidential construction sector is another major customer segment for Alcoa. In the next part of this series, we’ll analyze the recent trend in the nonresidential construction industry.

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