Melbourne, Australia (PRWEB) September 14, 2012
Soaring petrol prices increased demand for fuel-efficient cars while domestic motor vehicle manufacturers believed their main market would remain loyal to large, relatively fuel-inefficient cars. However, production figures showed that sales of large domestic vehicles fell while imports of small, fuel-efficient cars rose. Retailers that carried imported brands and cars in the small and light vehicle segments benefited from this trend. According to IBISWorld Industry analyst Aries Nuguid, “Automotive industry revenue is estimated to fall by an annualised 0.9% over the five years through 2012-13 as manufacturers struggled”. Conditions will improve in 2012-13 and revenue is forecast to increase by 3.6% to $122.4 billion. Higher real household disposable income will back the rise in sales and production. Industry operating profit margins widened over the past five years. Margins widened as the global downturn pushed out inefficient organisations. Industry operating profit margins contracted in 2008-09 due to diminished demand resulting from the global downturn.
Industry operating profit margins are forecast to decrease over the next five years to 2017-18. Most of the industry's profitability comes from the service segments because they do not face international competition. Mechanics are expected to experience relatively stable margins. The retailing segment, on the other hand, is expected to experience diminishing margins and drag down industry profitability. Retailing will experience weaker margins due to online competition. “The focus over the next five years will be on technological innovation that will steer the industry into a green future”, says Nuguid. Investment in environmentally friendly technology will rise. Every automotive manufacturer will launch fuel-efficient or small cars, which will also benefit component manufacturers. However, import competition will continue to better domestic manufacturers.
The Automotive industry has a low level of market share concentration. Concentration is low because the industry covers the entire automotive supply chain - from the component manufacturer to the car dealer. As a result, there is a wide range of companies operating at various levels of the automotive supply chain. Market share concentration decreased over the past five years as the large automotive manufacturers underperformed the many smaller service-oriented firms. The large manufacturers faced strong competition from import competition. Meanwhile, the smaller service-based firms, such as repairers and retailers, benefitted from geographic protection against international competition. Market share concentration is expected to further decline over the five-year outlook. Market share concentration will continue to dissipate with import competition expected to remain strong. The three largest firms in the industry are Toyota, GM Holden and Ford.
For more information, visit IBISWorld’s Automotive Industry report in Australia industry page.
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IBISWorld industry Report Key Topics
The industry includes car manufacturers, parts suppliers, car dealers and mechanics. These companies are generally engaged in the design, research, development, manufacture, selling, and maintenance of motor vehicles and parts. Motor vehicles refer to cars, utes, station wagons, SUVs and people movers sold to the public, businesses or the government. The report does not cover vans, motorcycles, buses or heavy commercial vehicles such as trucks.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.