Automakers are moving toward fuel efficient vehicles to remain competitive
Los Angeles, CA (PRWEB) October 20, 2012
The lingering effects of the recession have significantly altered the state of the Car and Automobile Manufacturing industry over the five years to 2012. At the onset of the economic turmoil in 2008, automakers had already been enduring crashing consumer demand for new vehicles. The situation took a turn for the worse in 2009, though, as US vehicle sales fell to historic lows and industry revenue plummeted an alarming 36.5%. The “Big Three” automakers (General Motors, Ford and Chrysler) all took desperate measures to get back on their feet. According to IBISWorld industry analyst Tony Danova, “these measures included plant closures, suspending research and development, drastically reducing employment and making pleas for government bailouts.” Despite these efforts, Chrysler and GM sought bankruptcy protection in May and June of 2009, respectively.
Operating within such volatile conditions, company market share has varied significantly within the five-year period. For example, General Motors, the largest US-based automobile manufacturer, has seen its market share dwindle rapidly since 2007. This dynamic has left significant opportunities for smaller foreign operators to radically change the industry landscape. “Hyundai-Kia Automotive group, a South Korea-based manufacturer, achieved phenomenal growth from 2007 to 2012,” says Danova. Nonetheless, several operators were forced to exit or be acquired by larger companies during the recession, as they were unable to operating within such volatile conditions.
Concerns of further turmoil in the Car and Automobile Manufacturing industry were staunched, however, with the uptick in vehicle sales and production over the past two years. As the economy slowly improved through 2010, consumer disposable incomes rose and financing options became more widely available, allowing consumers to unleash pent-up demand for new vehicle purchases that were delayed through the recession. This restored demand for new vehicle purchases shot revenue up 40.1% in 2010, while persistent production and sustained sales boosted revenue 12.5% in 2011. Continuing this recover, revenue is estimated to grow 4.8% in 2012. The success of the past two years has helped the industry mask some of the turmoil it faced during the recession; as a result, revenue is only expected to fall at an average annual rate of 0.2% to $90.7 billion over the five years to 2012.
The outlook for the Car and Automobile Manufacturing industry over the next five years is much brighter. Beginning in 2012, industry profit margins are expected to reach a relatively healthy 2.4% as companies benefit from rising vehicle sales and the cost cutting measures enacted in 2009, including better operational efficiency at manufacturing plants. By 2017, margins are also expected to grow in spite of rising input costs. Moving forward, automakers are expected to focus production on smaller, lighter and more fuel-efficient vehicles to become more competitive in the wake of rising gas prices. Shifting consumer preferences, along with a general recovery in the demand for vehicles, will boost revenue over the next five years. For more information, visit IBISWorld’s Car & Automobile Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture cars and automobile chassis. These companies, referred to as automakers, typically produce cars (including electric cars) in assembly plants. The manufacturing of light trucks (such as vans, pickups and SUVs), heavy trucks and motorcycles is excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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