Automakers will focus on improving fuel efficiency to boost demand for SUVs and trucks
Los Angeles, CA (PRWEB) April 04, 2012
High gas prices, environmental concerns and deteriorating consumer sentiment have stalled the SUV and Light Truck Manufacturing industry's revenue since 2007, forcing an annual decline of 4.2% over the five years to 2012. The sudden decline in demand and the recession's negative effects toppled General Motors and Chrysler in 2009, but according to IBISWorld industry analyst Anotonio Danova, “The companies are now better prepared to compete on a global scale.” Automakers have responded to consumers' environmental concerns by offering expanded hybrid and crossover-utility vehicle (CUV) vehicle lines. The popularity of hybrids and CUVs has supplanted most SUV demand; CUVs account for more than 48.2% of all revenue in 2012. Despite the popularity of these vehicles, industry demand remains low. Nevertheless, recent activity is expected to help industry revenue grow moderately in 2012.
The government and major industry operators are taking note of consumer concerns regarding higher gas prices and fuel economy. Two major government programs of the past five years have significantly influenced manufacturer operations. In July 2009, President Obama initiated “Cash for Clunkers” to boost auto sales for the industry as a whole while also lowering the number of vehicles with poor gas mileage on the road. In July 2011, the Obama administration updated the government-regulated industry standards for fuel economy. Corporate Average Fuel Economy (CAFE) regulations were revised so that an average 23.5 MPG fuel economy is met by model year 2016. Furthermore, automakers must meet higher standards through model year 2025. According to Danova, “Manufacturers may incur significantly higher costs to meet these standards in the short run. However, a trend toward cleaner, more fuel-efficient engines could significantly benefit the industry in the long run.” Major firms in the SUV and Light Truck Manufacturing industry, including General Motors, Ford, Toyota, Chrysler and Honda, have a dominant hold on the market, with about three-quarters of the industry’s revenue.
Over the next five years, automakers will focus on producing CUVs and trucks with an emphasis on improved fuel efficiency. By providing additional power train options, including clean diesel and hybrids, firms will strengthen their revenue. This emphasis and a restructured business model will reduce overall operating costs to further stabilize this industry. As a result, industry revenue is projected to grow over the five years to 2017. For more information, visit IBISWorld’s SUV & Light Truck Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture light trucks and utility vehicles such as vans, pickups, sport-utility vehicles (SUVs), and crossover-utility vehicles (CUVs). They also manufacture light truck and utility vehicle chassis. This industry excludes the manufacturing of cars and motorcycles.
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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