In both mature and growing economies, mergers and acquisitions have been a common trend
Los Angeles, CA (PRWEB) July 21, 2012
The past five years have been an eventful ride for the Global Heavy Duty Truck Manufacturing Industry. IBISWorld estimates that industry revenue will grow by just 0.9% annually during the five years through 2012. Governments across the globe have been launching new regulations aimed at reducing emissions from trucks, while the economic downturn wreaked havoc with revenue in 2009. “When new standards are introduced, the price of trucks typically goes up due to research and development costs spent on making the truck emissions compliant,” says IBISWorld industry analyst Aries Nuguid. Truck buyers are aware of this trend and when a change in legislation is announced, they tend to purchase trucks in anticipation of a rise in prices once the new law is implemented. This led to inflated growth rates in the three years prior to 2007, as new legislation (and price hikes) came into effect during that year. Demand slowed in 2007 but was up again in 2008, led by strong growth in China.
Over the past five years, truck manufacturers had to deal with rising oil prices, which drove down margins and reduced freight levels. High fuel costs contributed significantly to a fall in demand for trucks in the United States in 2007 and 2008. In 2009, the global recession led to lower income, freight levels and investment. This resulted in lower demand for trucks, particularly in the United States, Japan and several countries in Western Europe. Truck and bus production declined by 17.8% in 2009. Demand has risen since then and in 2012, revenue is expected to increase by 11.2% to $250.9 billion. However, the size of the industry will still be below pre-recessionary levels, mainly due to a slow recovery. Demand is being affected by the supply of used trucks and buses and fragile economies, particularly in the Western world. While Western economies were struggling to keep their economies afloat, China and other developing countries bucked trends by posting healthy increases in demand. In 2009, China was the only country in the world to increase its truck output. Production in Brazil, Russia, India and China will grow over the next five years. The global economy will recover, which will lead to a rise in the demand for trucks across the world. Governments will continue to introduce more stringent emissions regulations in an effort to make the trucking sector greener. IBISWorld forecasts that industry revenue will rise over the five years to 2017.
In 2012, the top four players in the Global Heavy Duty Truck Manufacturing Industry will account for an estimated 40.2% of industry revenue. Concentration has been rising over the past five years, as major players take over smaller players in order to grab market share. In particular, large players have been purchasing brands that will give them entry into markets that are difficult to enter. In the past ten years, Volvo has acquired Renault and Mack trucks and Daimler has acquired Sterling, Western Star and Mitsubishi Fuso. Concentration fell in 2009 as some major players recorded severe declines in revenue due to the financial crisis. In fast-growing economies such as China, mergers and acquisitions in the past five years have also been a major feature of the industry. China's heavy duty truck manufacturing industry is in a growth phase and collaboration is increasing. SIAC Iveco Hongyan, a truck manufacturer, is a good example. SIAC acquired the Nanqi brand from Iveco and then entered into a joint venture with Chongqing Heavy-Duty Truck to become SIAC Iveco Hongyan. According to Nuguid, mergers and acquisitions differ between mature economies and growing ones. In Western economies, they often occur because the market is shrinking and companies are failing. In emerging economies, mergers are mainly done for collaboration purposes, in order to share and develop technology. Total market concentration is expected to increase in the next five years as current players absorb non-performing players to increase their economies of scale and plant utilization, particularly in mature economies. For more information, visit IBISWorld’s Global Heavy Duty Truck Manufacturing industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture truck and bus chassis and assemble trucks, buses and other special purpose heavy duty motor vehicles for highway use such as firefighting trucks. Trucks manufactured by this industry refer to heavy trucks used by freight companies and does not include passenger 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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