As the Motor Vehicle Manufacturing industry continues to struggle, upstream suppliers feel the pinch.
Melbourne, Australia (PRWEB) August 05, 2013
Despite greater electric content in motor vehicles, the Automotive Electrical Component Manufacturing industry faced numerous challenges that have hindered growth over the past five years. Rising petrol prices left consumers little choice but to switch to smaller imported vehicles. IBISWorld industry analyst Kosta Lev states, “domestic motor vehicle production plummeted, to the detriment of parts manufacturers.” Specialist component manufacturers were hit worst, as they mainly supply to motor vehicle assemblers. Due to the dire conditions, industry revenue is expected to decline by an annualised 0.8% over the five years through 2013-14 to reach $1.4 billion. However, revenue is expected to increase 6.9% over 2013-14. A dropping Australian dollar from 2012-13 has assisted with the rebound in revenue over the past two years.
Industry profitability has increased over the five years through 2013-14. However, this is off a low base year and misrepresents the falling trend in industry profitability. Operating profit margins have been declining in line with falling demand. The automotive manufacturing sector in Australia has suffered immensely over the past five years. According to Lev, “production declines from this major market led to drops in demand. The resulting overcapacity in the industry has been causing profitability to fall.” Falling margins will be cushioned as the least efficient operators leave the industry over the next five years. The industry is forecast to continue to face challengers over the next five years. Pent-up demand for motor vehicles will benefit the industry. However, the domestic automotive sector is likely to remain uncompetitive in the global market.
Market share concentration is at a low level in the Automotive Electrical Component Manufacturing industry. Market share concentration is low because manufacturers tend to specialise in a few product segments. The specialisation limits market share of major companies. An estimated 55% of establishments are non-employers, implying that besides a few major players, the industry is highly fragmented. The Motor Vehicle Manufacturing industry in Australia being in a state of flux. Concentration is expected to increase over the next five years, as the motor vehicle assemblers reduce the number of suppliers they purchase from. For more information, visit IBISWorld’s Automotive Electrical Component Manufacturing report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture automotive electrical components such as air conditioners and demisters. Companies can be either specialist component manufacturers, producing components for use in new motor vehicles, or standard manufacturers, making parts for the aftermarket. Firms in this industry do not manufacture batteries.
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
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