Increasing consumer confidence and record-low interest rates caused demand for cars to surge following the recession.
New York, NY (PRWEB) August 06, 2014
Over the past five years, the Vehicle Shipping Services industry has recovered from its recessionary trough. Industry operators use trucks, railroads and ships to transport vehicles, such as cars and motorcycles. During the recession, high unemployment and declining income levels caused consumer spending and confidence to plummet, with sales of big-ticket items, such as cars, collapsing. As a result, fewer vehicles were delivered to key markets, and vehicle freight volumes plunged. Consequently, demand for Vehicle Shipping Services industry services fell, and revenue declined a drastic 31.0% in 2009.
According to IBISWorld Industry Analyst Maksim Soshkin, “Demand for industry services rapidly recovered in postrecessionary years.” Car-purchase incentive programs like Cash for Clunkers, improving economic conditions and record-low interest rates caused demand for cars to surge; new car sales are expected to increase at an annualized rate of 9.1% to 16.4 million over the five years to 2014. Consequently, vehicle freight volumes have rapidly increased, driving up industry revenue and profit. As a result, industry revenue is expected increase at an annualized 12.9% to $12.0 billion over the five-year period.
“The industry's strong performance largely reflects a rebound from a very low recessionary base in 2009; in fact, industry revenue did not return to 2004 prerecessionary levels until 2012,” says Soshkin. Over the five years to 2014, as pent-up demand was satisfied and interest rates began to increase, car sales slowed and vehicle freight volume growth declined. However, demand for industry services has begun to normalize, and industry revenue is expected to increase 3.1% in 2014.
Improving economic conditions and consumer confidence will boost car sales, leading to higher vehicle freight volumes and stronger revenue growth. Moreover, rising US auto exports are anticipated to increase the need to transport vehicles to ports, bolstering demand for industry services. However, rising interest rates will make it more expensive for consumers to purchase vehicles, thereby tapering the growth of car sales and demand for industry services.