New vehicle sales over the next five years will limit growth prospects for the industry.
Los Angeles, CA (PRWEB) November 26, 2013
The majority of operators in the Car Body Shops industry have enjoyed a relatively smooth ride over the past five years. On one hand, the economic recession harmed industry participants, as many Canadians held off on essential repairs and discretionary services, including window tinting. At the same time, the global recession tightened consumers' purse strings, and hence many people held off purchases of big-ticket items such as automobiles, as evidenced by an 11.4% drop in new vehicle sales in 2009. Alternatively, existing vehicles were increasingly fixed and upgraded, resulting in a 5.2% jump in industry revenue over the same year. Starting in 2010, the economic recovery has encouraged a rebound in new vehicle sales, which in turn translated into slower industry growth over the following years. Therefore, over the five years to 2013, industry revenue is anticipated to grow at an average annual rate of 1.9% to $4.6 billion.
According to IBISWorld Industry Analyst Agiimaa Kruchkin, “The total number of vehicles on the road determines the likelihood of accidents and collisions, which in turn drives up demand for industry services.” In 2013, the number of motor vehicle registrations is expected to grow an anaemic 0.3%, which will limit industry revenue growth to only 0.9%. Meanwhile, newer cars rolling off the assembly lines of automobile manufacturers are more powerful, safer and often help drivers avoid collisions. Stricter regulations in the automobile manufacturing industry have pushed car manufacturers to include heavy safety provisions for the driver; as such, fewer collisions resulted over the past five years due to advanced technologies present in new vehicles.
Over the next five years, industry operators are anticipated to travel along a bumpier road. “As the economy continues its rebound, consumers will enjoy greater disposable income and hence will increasingly purchase new cars,” says Kruchkin. These new cars will come equipped with more technologies that enhance safety and help drivers avoid accidents and mishaps. In turn, fewer collisions will translate into weaker downstream demand for car body repair services. New vehicle sales, which are anticipated to grow, will limit growth prospects for the industry. The Car Body Shops industry displays a low level of market share concentration. However, IBISWorld expects market share concentration has been increasing due to the industry trend of consolidation.
For more information, visit IBISWorld’s Car Body Shops in Canada industry report page.
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IBISWorld industry Report Key Topics
The Car Body Shops in Canada industry comprises establishments that are primarily engaged in providing repair, paint and customization work to the interior and body of passenger cars, trucks, vans and trailers. Some industry firms specialize in certain auto repairs; for example, paint shops specialize in post-collision paint jobs, while automotive glass shops replace, repair and tint windows. Restoration shops, which typically represent a niche market, restore classic and antique cars.
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