Industry conditions are improving as the economy recovers
London, United Kingdom (PRWEB) July 28, 2012
Soaring fuel prices sent Britons away from fuel-inefficient, petrol-run cars and toward smaller diesel-run vehicles. The consumer shift hurt motor vehicle manufacturers as the majority of cars still produced are the more traditional and less fuel-efficient vehicles. However, this trend alone does not explain the 23.8% fall in industry revenue over 2009-10. The main culprit for this disastrous performance was the recession. The 'cash for bangers' incentive scheme encouraged some new car sales, but it was not enough to offset the severe demand decline. Export markets were also dismal as the financial crisis was global. Manufacturers had no choice but to reduce production drastically.
Conditions have since improved. Production is growing, albeit off a low base. The European economy will continue to be fragile, which will limit export growth. This will be offset by higher demand from the US market and improvement in the domestic market. According to IBISWorld industry analyst Aries Nuguid, “the recovery was not quite enough to offset the dramatic drop in revenue that occurred in the global downturn”. Overall, revenue is estimated to contract by an annualised 0.7% over the five years through 2012-13 to reach £40 billion. As the economy recovers, demand and production will be more stable. Business and consumer confidence will strengthen and fuel-efficiency trends will support production, with petrol-electric hybrid and electric cars manufacturing expected to take place domestically in the next few years. However, manufacturers will continue to feel pressure from import competition. Nuguid adds, “domestic manufacturers will face challenges in European export markets due to high levels of sovereign debt”. Industry revenue is forecast to decline slightly over the five years through 2017-18.
The Motor Vehicle Manufacturing industry has a high level of concentration with the top four players accounting for an estimated 76.2% of revenue. Furthermore, the seven major players account for 91.2% of revenue, which means that the industry is not fragmented and is instead highly concentrated. Major companies include Tata Motors, Ford, Nissan, GM, BMW, Toyota and Honda.
For more information on the Motor Vehicle Manufacturing industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Companies in this industry manufacture and assemble motor vehicles. Motor vehicles include passenger cars, commercial vehicles (such as lorries), buses and special-purpose vehicles (such as snowmobiles and fire engines). Businesses also make motor vehicle engines and vehicle chassis.
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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