November 7, 2018 / 2:20 PM / 12 days ago

Voestalpine sees lower auto industry demand continuing into 2019

VIENNA, Nov 7 (Reuters) - Austrian speciality steelmaker Voestalpine is preparing for lower demand from its auto industry customers to continue in the second half of its 2018/19 business year, its chief executive said on Wednesday.

Voestalpine produces high quality flat steel components and finished parts for mainly German carmakers and has followed them in expanding production overseas in recent years.

It generates around one-third of group sales from automakers such as Daimler, BMW and VW and its first-half earnings have fallen in part due to lower deliveries to them.

“We see a fairly significant cooling down in the European auto sector,” Wolfgang Eder told a news conference in Vienna, adding that demand from the industry has significantly declined since late summer largely due to new pollution rules.

Eder’s assessment follows some big carmakers including Daimler and BMW warning of lower profit as they shoulder heavy investments to overhaul combustion engines to meet the more stringent emissions standard WLTP.

The Worldwide Harmonised Light Vehicle Test (WLTP) is the European Union’s new fuel efficiency rating for all petrol, diesel, electric and hybrid cars, in place since September.

While car manufacturers are busy with the upgrades, they are building and selling fewer new cars, Eder said.

The industry veteran, who will step down next year, does not see a rapid recovery. “This will drag on throughout the second half of this business year,” Eder said. Voestalpine’s business year ends March 31.

The CEO hopes to get an indication of when to expect demand to increase again in December, when carmakers close their plants for Christmas. The more spare cars an automaker has, the longer he expects the factory holidays to be.

“I assume that factory holidays will tend to be longer than we have seen in recent years.”

Reporting by Kirsti Knolle; editing by David Evans

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