Establishment numbers are falling as the industry suffers weak demand conditions
Melbourne, Australia (PRWEB) May 04, 2012
Component manufacturers in the Automotive Parts and Accessories Manufacturing industry faced some challenges during the past five years. Being part of the automotive supply chain, the preferences of car buyers and woes of car manufacturers directly affect component manufacturers. According to IBISWorld industry analyst Aries Nuguid, ‘The popularity of small imported cars grew, which put downward pressure on domestic motor vehicle production’. Component manufacturers felt the brunt of the decline in motor vehicle production, particularly since they are small companies, ill-positioned to deal with sustained periods of falling demand. Ailing car manufacturers also increasingly used cheaper imported components at the expense of domestic components. To make things worse, the Australian dollar appreciated over the period, making imported car components accessories and parts even cheaper. A fall in tariffs has also contributed to the price competitiveness of imported components. With such poor conditions, industry revenue is expected to decline 5.8% over the five years through 2011-12 to reach $5.20 billion.
Revenue is expected to grow 5.7% in 2011-12 mainly due to a shortfall in the supply of components locally and recovering automotive industries across the globe. In Australia, motor vehicle production will be somewhat supported by higher consumer and business sentiment and by the switch to green cars. Nuguid adds, ‘As consumers feel better about their finances and domestic car manufacturers start making green and small cars, demand for automotive parts and accessories will strengthen’. This will boost demand for industry products, which will support industry revenue. However, overseas manufacturers will pose strong import competition, with penetration expected to increase. With import satisfying a greater portion of domestic demand, industry revenue will fall over the five years through 2016-17.
The Automotive Parts and Accessories Manufacturing industry portrays low market share concentration. The rest consists of smaller players that subcontract to these larger players. Concentration is expected to increase in the next five years. There is a growing trend for large firms (demand side) seeking significant reductions in the number of suppliers they work with to reduce internal costs and work with only the best. This may result in downstream companies reducing links with smaller firms. The government will also promote consolidation. The largest players in the industry are Arrowcrest Group, Pacifica Group and ARB Corporation.
For more information, visit IBISWorld’s Automotive Parts and Accessories Manufacturing report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture non-electrical automotive components, which include various car accessories, mufflers and child restraints. They do not manufacture engines or car seats. These companies may supply the motor vehicle assemblers or replacement parts (the aftermarket).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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