Growth in hybrid and alternative fuel vehicles will boost demand for engine manufacturers
Los Angeles, CA (PRWEB) December 24, 2012
The past five years were difficult for the Global Automobile Engine and Parts Manufacturing industry. More stringent emission regulations, coupled with consumers requiring more fuel-efficient vehicles, created challenges for manufacturers in mature economies. To make matters worse, the price of key input commodities, such as steel kept rising. This trend caused purchase costs for manufacturers to rise, which severely squeezed profit margins. Engine manufacturers in emerging economies, on the other hand, saw demand for engines rise rapidly. Countries such as China had income growth as well as road infrastructure expansion that buoyed this industry's revenue.
Strong growth and heavier motor vehicle use in emerging economies helped offset the losses of the general slowdown in economic activity throughout the developed world. Thus, industry revenue is expected to increase an annualized 1.0% over the five years through 2012 to reach $275.9 billion. In 2009, motor vehicle sales plummeted in most mature economies due to falling income and rising unemployment. Motor vehicle producers did not anticipate this and suffered massive inventory buildup. In response, they slashed production in 2009, which negatively affected the demand for engines. Conditions have since improved, backed by higher motor vehicle production and demand from the aftermarket. Emerging economies will continue to lead the demand for engines, which will promote revenue growth of about 5.6% in 2012. The largest industry operators are General Motors Corporation, Ford Motor Company, Volkswagen AG, Toyota Motor Corporation and Daimler. As such, the Global Automobile Engine and Parts Manufacturing industry is deemed to have a low level of market share concentration. Concentration has not changed significantly over the past five years. When Daimler and Chrysler went their separate ways, Daimler consolidated its engine plants, but this only minimally affected concentration. Toyota has been gaining share at the expense of GM and Ford, but did not affect the overall top four companies' market share concentration much. Concentration is forecast to rise over the next five years though due to consolidation, particularly in Western economies. In contrast, a number of engine parts manufacturers are expected to start operations in the emerging world, particularly in China, India, South East Asia, Eastern Europe and South America.
The future holds innovation and a new era of engines for the industry. Hybrid and alternative fuel vehicles will become more popular, which will change the type of engines required by motor vehicle manufacturers. There will also be a shift toward smaller engines as consumers increasingly demand these types of engines due to their fuel economy. Additionally, demand will continue to be driven by emerging economies and environmental trends and standards. As a result, IBISWorld expects industry revenue to grow over the five years through 2017. For more information, visit IBISWorld’s Global Automobile Engine and Parts Manufacturing industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture and rebuild motor vehicle engines and engine parts. Engine varieties include gasoline and diesel as well as engines used in alternative fuel and hybrid electric vehicles.
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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