EPA regulations threaten manufacturers, but fuel-efficient technology will strengthen demand
Los Angeles, CA (PRWEB) August 15, 2012
Operators in the Truck and Bus Manufacturing industry have faced volatile swings during the past five years; however, recent activity in key downstream markets has the industry rolling along smoothly. After suffering through the downturn, truck and bus manufacturers have enjoyed heightened demand for their products over the past two years. The Environmental Protection Agency (EPA) enacted the final phase of emissions standards in 2010. As a result, truck manufacturers were able to cope with the rising demand for vehicles that are compliant with these standards. In turn, production capacity used to meet this demand is becoming more active, and freight companies are also ramping up output. “As trucking activity continues to recover, revenue is expected to climb 2.1% in 2012,” says IBISWorld industry analyst Antonio Danova. “Moreover, recent booming demand has brought revenue growth up to 2.6% per year on average over the five years to 2012 to total $23.9 billion.” The Truck and Bus Manufacturing industry is highly globalized and concentrated. Over the five years to 2012, a slump in domestic activity enticed major players to expand internationally, with a particular focus on Asian and South American markets. The relative decline of manufacturing and export-focused industries in the United States limited growth prospects for truck manufacturers. The potential for more rapid growth domestically was available, but the opportunity to shift markets abroad was enticing for manufacturers in the face of the economic downturn. In light of these trends, the number of establishments has decreased over the past five years in 2012.
The next five years are expected to be brighter for the Truck and Bus Manufacturing industry. Strengthening global growth will likely lead to higher trade and freight volumes and, in turn, increased demand for trucks to carry goods, creating greater demand for new truck purchases. Furthermore, as a result of previous EPA regulations, truck and bus manufacturers have heavily invested in new technologies since 2007. Trucks that make use of fuel-efficient technologies and alternative fuels will be appealing as diesel fuel prices rise over the next five years. These trucks will also fetch higher prices as demand for trucks grows while the US economy continues to grow, also enhancing the profitability of the industry in the process. As such, revenue is forecast to grow in the five years to 2017, according to Danova.
The industry portrays a high level of market share concentration with the top four companies accounting for most of industry revenue in 2012. Over the past five years, concentration has grown through acquisitions and mergers. The top major players have leveraged their favorable economies of scale and eliminated some peripheral competition through important mergers or acquisitions. Also, some major players have enhanced concentration through joint ventures. For example, Navistar entered a financing partnership with GE Capital to gain a favorable retail-financing partner. This move will help Navistar enhance their market presence by offering customers more reliable access to credit. Concentration will remain steady, though some major players will consolidate brands to address overcapacity. Such efforts pushed Daimler down from its number one market position in 2010. Mergers and acquisitions were also more common in the less concentrated bus segment. For more information, visit IBISWorld’s Truck & Bus Manufacturing in the US 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 specialty heavy-duty vehicles, including ambulances and firefighting trucks. Trucks manufactured by this industry include heavy trucks used by freight companies but exclude 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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