Rising globalization and demand from major automakers will lead to a modest recovery
Los Angeles, CA (PRWEB) August 03, 2012
Historically, automakers have been the main drivers of demand for the Automobile Interior Manufacturing industry, a relationship that proved to be this industry's downfall during the recession. As demand for automobiles fell and the Car and Automobile Manufacturing industry (IBISWorld report 33611a) was in disarray, demand for interior parts crashed. However, conditions improved in 2010 and 2011 as more efficient operations among the major automakers facilitated growth in vehicle production. According to IBISWorld industry analyst Antonio Danova, this trend sparked demand for interior products, and industry revenue grew 10.0% in 2011. In 2012, revenue is expected to increase 8.3% to $18.9 billion; however, this growth will be unable to raise revenue to prerecession levels, yielding an average annual decline of 2.5% since 2007.
Over the five years to 2012, consumer demand trends have had a marked effect on the Automobile Interior Manufacturing industry. High gasoline prices and environmental concerns led consumers to increasingly demand fuel-efficient vehicles, but domestic automakers stalled on production. Instead of responding to the shift in demand by manufacturing fuel-efficient cars, US automakers persisted in producing gas-guzzlers, says Danova. When the recession hit, all car sales plummeted, causing US manufacturers to seek emergency help from the government. As motor vehicle production fell, demand for interior parts declined as well. The industry has a medium level of concentration. The top four players include Johnson Controls Inc., the Lear Corporation, International Automotive Components Group North America and the Visteon Corporation. Concentration declined in the early 2000s due to divestitures, but rose again in 2007 and 2008 following the consolidation of Lear’s and Collins & Aikman's interiors businesses into a new, privately owned company. Acquisitions have continued in recent years. In addition, some companies have left the industry. As a result, the number of enterprises is projected to grow only slightly, at an annualized rate of 0.9% to 311 firms over the five years to 2012.
Industry profit fluctuated drastically over the past five years. Even as demand from manufacturers fell, firms failed to combat rising costs in response to lower revenue, yielding lower profit margins. Nevertheless, in 2012, profit margins are expected to increase. Margins rose after cost-cutting strategies were enacted to mitigate financial pressures from the recession. This strategy helped operators regain profit after historically low margins in 2010. Still, the increased costs of expansion and downward price pressures from automobile manufacturers will likely calm profit margins down to historical norms by 2017. Over the five years to 2017, the automotive sector is expected to globalize further, with imports and exports increasing. Domestic automobile interior manufacturers will benefit from growth in worldwide demand. Growth in manufacturing activity and export demand because of a weak US dollar will fuel sales to foreign markets. As a result, revenue is anticipated to rise over the five-year period. For more information, visit IBISWorld’s Automobile Interior Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture motor vehicle seats and a variety of interior components, including motor vehicle upholstery, seat covers and seat belts.
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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