Move toward Green Vehicles Will Drive Growth in the Car and Automobile Manufacturing Industry

Share Article

Through 2016, automakers will find the light at the end of the tunnel, with uninterrupted growth in the forecast, according to IBISWorld, the nation’s largest publisher of industry research. The consumer sentiment index is expected to rise at an annual average of 4.3% over this period, reaching 95.0, up from 76.8 in 2011. Continuous improvements in credit availability and disposable income will encourage increased spending on new vehicles. As a result, industry revenue is expected to rise 4.2% annually to $102.3 billion with 5.0% growth expected in 2012. However, the industry is still in decline, and will struggle to return to prerecession revenue levels even at the tail end of the outlook period.

IBISWorld Market Research

IBISWorld Market Research

In 2011, industry revenue is expected to grow 13.3% as vehicle sales continue to climb up from historic lows.

Through 2016, automakers will find the light at the end of the tunnel, with uninterrupted growth in the forecast, according to IBISWorld, the nation’s largest publisher of industry research. The consumer sentiment index is expected to rise at an annual average of 4.3% over this period, reaching 95.0, up from 76.8 in 2011. Continuous improvements in credit availability and disposable income will encourage increased spending on new vehicles. As a result, industry revenue is expected to rise 4.2% annually to $102.3 billion with 5.0% growth expected in 2012. However, the industry is still in decline, and will struggle to return to prerecession revenue levels even at the tail end of the outlook period.

The woes of the Big Three automakers (GM, Ford and Chrysler) have been so deep during the past two years that they took desperate measures to get them back on their feet. Plant closures, suspension of research and development, drastic employment reductions and pleas for government bailouts have been the recent frontline agenda. Despite these measures, Chrysler and GM were unable to reduce debt to a viable level and sought bankruptcy protection in May and June of 2009, respectively. Also, Italian automaker Fiat and the workers' union United Auto Workers (UAW) bought out Chrysler, helping the company emerge from bankruptcy. Last, the US government took a majority stake in GM, which helped the company follow Chrysler's footsteps out of bankruptcy protection. According to IBISWorld analyst Antonio Danova, since 2006, these conditions have caused revenue in the Car and Automobile Manufacturing industry to fall at an average annual rate of 4.0% to total $83.2 billion. “In 2011, industry revenue is expected to grow 13.3% as vehicle sales continue to climb up from historic lows,” says Danova.

Falling car production and plummeting profit have also hurt the Car & Automobile manufacturing industry, with the Big Three automakers posting losses since 2006. While Chrysler and GM required bailouts, Ford controlled its debt. The Japan-based automakers operating in the United States (Toyota, Honda and Nissan) have a different story. Unburdened by legacy costs (such as pricey pension funds and union membership) and the erroneous belief that consumers would always demand big cars, Japanese automakers recorded strong sales and profit until the first half of 2008.

The future of the Car and Automobile Manufacturing industry seems more certain now that Chrysler and GM have been saved from financial failure. In 2011, industry profit margins will be a relatively healthy 2.1% as companies benefit from a combination of cost cutting enacted in 2009 and rising vehicle sales. All automakers will focus production on environmentally friendly vehicles through 2016 in order to become more competitive. Shifting consumer preferences, along with a general recovery in the demand for vehicles, will help industry revenue grow at an estimated average of 4.2% annually to $102.3 billion by 2016.

For more information, download the full report from IBISWorld on the Car and Automobile Manufacturing industry

IBISWorld Industry Market Research Reports Contain:

About this Industry
Industry Definition
Main Activities
Similar Industries
Additional Resources

Industry at a Glance

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle

Products & Markets
Supply Chain
Products & Services
Major Markets

Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry

Major Companies

Operating Conditions
Capital Intensity

Key Statistics
Industry Data
Annual Change
Key Ratios

Jargon & Glossary

Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

###

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Savannah Haspel
Visit website