Import penetration and the subsequent lack of economies of scale has led the industry's major players to announce that they will exit the industry over the next five years
Melbourne, Australia (PRWEB) July 06, 2014
Motor Vehicle Manufacturing in Australia has been completely defeated by import competition over the past five years. According to IBISWorld industry analyst David Whytcross, “production volumes have plummeted as consumer demand shifts away from locally manufactured vehicles due to the greater fuel efficiency of many imported vehicles.” Importers have benefited from a high Australian dollar and tariff reductions. A decline in new car sales in 2009-10 as the global financial crisis continued was reversed over the past five years, but the subsequent growth was made up of imported vehicle sales. Industry revenue is forecast to fall by a compound annual 1.5% over the five years through 2014-15, to be worth $10.3 billion. Local motor vehicle manufacturers have traditionally manufactured large cars. Soaring fuel prices drove consumers to purchase fuel-efficient imported vehicles, such as small cars and SUVs, rather than locally manufactured large sedans. The demand shift was coupled with a high Australian dollar and a reduction in tariffs from 10.0% to 5.0% in 2010, making imported vehicles much cheaper than their locally manufactured counterparts.
Import penetration and the subsequent lack of economies of scale in local production, has led the industry's major players Toyota, GM Holden and Ford to each announce that they will exit the industry over the next five years. Ford is scheduled to leave the industry in October 2016, while Toyota and GM Holden are scheduled to exit during 2017. The announcements have triggered an increase in the pace of the industry's decline, with revenue forecast to fall 3.2% in the current year. “The industry will remain, however, due to truck manufacturing operations and small amounts of engine manufacturing,” says Whytcross. By 2019-20, truck manufacturers PACCAR Australia, Volvo Group Australia and Iveco Trucks Australia will become the industry's new major players.
The Motor Vehicle Manufacturing industry is currently very highly concentrated. Companies within the industry, particularly those manufacturing passenger vehicles, require a high critical mass of production to achieve economies of scale and viability. With Australia representing a small market, there has only been room for a limited number of manufacturers.
For more information, visit IBISWorld’s Motor Vehicle Manufacturing report in Australia industry page.
Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau
IBISWorld industry Report Key Topics
Companies in this industry manufacture motor vehicles. These vehicles include cars, sport utility vehicles (SUVs), light commercial vehicles, buses and vans, along with medium, heavy and special-purpose highway trucks. Vehicles produced in this industry are used for private and commercial purposes. Automotive engine manufacturing is also included in this industry.
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.