High oil prices and reduced US export demand hindered the industry.
New York, NY (PRWEB) February 27, 2014
Over the five years to 2014, the Car and Automobile Manufacturing industry in Canada has been on a bumpy road. Even before the economic downturn, many of the larger automakers had already been enduring falling consumer demand for new vehicles. The problem was only exacerbated by the automotive crisis in the United States, the effects of which ultimately flowed through to Canadian automobile producers. In 2009, industry revenue plummeted 12.4% as production at Canadian manufacturing plants halted due to crippled consumer demand.
The pace of the industry generally moves in lock step with export demand, particularly from the United States. Expected to account for 76.2% of industry revenue in 2014, exports are the largest market for the industry. Furthermore, the United States has consistently accounted for over 90.0% of all Canadian automobile exports over the past five years, including a 98.4% share of exports in 2014. Thus, as US demand for vehicles plummeted during the recession, Canadian production was hampered. On the other hand, the recovery in the US automotive market in 2010 proved to be a boon for this industry. According to IBISWorld Industry Analyst Brandon Ruiz, “Consumers flocked back to the market to make new vehicle purchases that had been delayed during the downturn, resulting in a 16.5% jump in revenue in 2010.” Since then, the industry has continued on its path toward growth. As a result, IBISWorld expects revenue to grow at an annualized rate of 4.6% to roughly $24.0 billion over the five years to 2014, lifted slightly by an estimated 0.1% increase in 2014.
Over the next five years, automakers are expected to keep their engines revving, however, rising oil prices may ultimately subdue the true growth potential of the industry, as more expensive gas prices generally make consumers reluctant to purchasing new cars. Still, a silver lining in high gas prices is that demand for hybrids and electric vehicles (EVs) is likely to rise. “Higher production of these vehicles, which carry added technology and are sold at premiums, will lead to greater revenue within the industry, while simultaneously inflating profit,” says Ruiz. As a result, industry revenue is expected to grow during the five years to 2019.
For more information, visit IBISWorld’s Car and Automobile Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
Companies in the Car and Automobile Manufacturing industry manufacture cars and automobile chassis. These companies, referred to as automakers, typically produce cars, including electric cars, in assembly plants. The manufacture of light trucks (e.g. vans, pickups and SUVs), heavy trucks and motorcycles is excluded from this industry.
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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