A recovering economy boosted demand for new vehicles, fueling demand for catalytic converters
Los Angeles, CA (PRWEB) May 31, 2012
Catalytic converter manufacturers endured two tumultuous years in 2008 and 2009. Automakers, the industry's main customers, encountered rapidly declining demand for vehicles in 2009, and new vehicle sales fell 21.4%. However, a recovering economy created an uptick in demand for new vehicles, ramping up production lines at automotive manufacturing plants and fueling demand for catalytic converters, says IBISWorld industry analyst Brian Bueno. As a result, Catalytic Converter Manufacturing industry revenue is expected to decline at a lower than expected annual rate of 2.0% over the five years to 2012, totaling $2.1 billion. Despite the short-term commotion for the industry, rising emissions standards and increasing demand for replacement and aftermarket catalytic converters helped sustain demand for catalytic converters over the long-term. In spite of the fact that the majority of catalytic converters are purchased by new car manufacturers, aftermarket and replacement catalytic converters are also an important driver of industry revenue. As consumers pulled back on new vehicle purchases during the recession, the average age of registered vehicles in the US grew. As the vehicles on the road got progressively older, they were more likely to need replacement catalytic converters to meet emissions standards and pass smog tests. This increased demand for replacement catalytic converters throughout the recession. However, these trends have reversed in 2011 and 2012, as more people are purchasing new vehicles and the average age of the vehicle fleet is falling.
In the face of the auto sector's setbacks, manufacturers have made some structural changes that will yield long-term benefits including lower labor costs and production capacity matching demand more closely. Over the next five years, catalytic converter manufacturers will regain their stature, and in 2012, revenue will grow. The strong upward trend in car sales will bode well for the industry in the long run. Through 2017, catalytic converter manufacturing revenue is projected to climb. Over the next five years, regulatory intervention and full automaker recovery will drive growth through increased production of high technology and value-added catalytic converters, Bueno says. In addition, the possible regulation of carbon-dioxide emissions from vehicles would require expanded catalytic converter capabilities, further driving growth in the Catalytic Converter Manufacturing industry.
The Catalytic Converter Manufacturing industry is characterized by a low level of concentration, with the top three companies accounting for less than a fourth of industry revenue. Concentration has remained largely stable over the past five years, as companies choose to operate within particular market segments. While some companies, such as MagnaFlow, primarily serve the automotive aftermarket, other firms supply catalytic converters to automobile manufacturers through the original equipment manufacturer (OEM) market. Major company Tenneco derives the majority of its revenue through contracts with automobile and other equipment manufacturers. Other firms in the industry, such as Donaldson, also supply manufacturers. They typically work through contracts and supply specialized catalytic converters for specific vehicles or machinery; therefore, it is difficult for companies to expand beyond their particular market segments or develop products that can satisfy a wider share of the catalytic converter market. For more information, visit IBISWorld’s Catalytic Converter Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures catalytic converters that are used in internal combustion engines. These converters remove toxic exhaust emissions, including carbon monoxide and unburned hydrocarbons, from engine output.
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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