The recovering US economy will boost trade activity and demand for freight transportation.
Los Angeles, CA (PRWEB) August 09, 2013
In the five years to 2013, the Truck and Bus Manufacturing industry in Canada faced plummeting demand, beginning with the economic turmoil in 2008. “Industry demand heavily relies on the success of the United States, the industry's largest trade partner,” says IBISWorld industry analyst Brandon Ruiz. As the US economy dove during the recession, industry revenue followed suit. To this end, revenue is expected to decline at an average annual rate of 14.9% to $2.4 billion in the five years to 2013, with a jump of 1.2% in 2013 alone. Unlike the United States, Canada's strong banking sector allowed the economy to avoid significant declines in GDP. However, the same cannot be said for the Truck and Bus Manufacturing industry. Because of the relative strength of the Canadian economy during the recession, investors sought refuge in the Canadian dollar, consequently appreciating the currency and making domestic goods more expensive for foreign countries. Because exports account for a significant portion of industry revenue, the Canadian dollar's higher value effectively reduced industry demand.
The Truck and Bus Manufacturing industry in Canada has a medium level of concentration. The three top players are PACCAR Inc., Navistar International and New Flyer Industries Inc. Over the past five years, the three top players have remained dominant despite plummeting industry revenue because these companies' revenue fell line with the industry as a whole. To this end, market share concentration has remained largely unchanged. “IBISWorld expects concentration to change in the future only if the top industry operators cannot meet the emissions standard benchmarks,” continues Ruiz. The rising price of crude oil, a major input for truck and bus users, along with emissions regulations, are forcing the industry to innovate and develop new engine technologies. Because Canadian emission standards are harmonized with US regulations, industry operators are forced to invest more in research and development and incur additional compliance costs, which pose a threat to profitability. On the other hand, if Canadian emissions regulations were not harmonized with the stringent US standards, operators would be at a competitive disadvantage because they would not be providing their biggest market with a relevant product.
Not all is bad news for truck and bus manufacturers, though. As the United States continues to recover, consumers are expected to increase spending, leading to higher overall demand and trade activity, which will bolster demand for freight transportation and provide a significant bump in industry revenue. For more information, visit IBISWorld’s Truck and Bus Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry primarily manufactures heavy-duty vehicles and heavy-duty vehicle chassis for highway use.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized 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 US and Canadian 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 Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.