The rising world price of crude oil is expected to hamper profit growth.
New York, NY (PRWEB) August 10, 2014
Over the five years to 2014, revenue for the Automobile Wholesaling industry is expected to trend higher, bolstered by a resurgence in demand for new vehicles. Since industry operators wholesale passenger vehicles, in addition to sport-utility vehicles and heavy duty trucks, industry revenue tends to ebb and flow with general fluctuations in the overall economic climate, particularly at the consumer level. Moreover, industry operators heavily rely on economic conditions in the United States, as a large portion of revenue is derived from Canada's southern neighbour. “Although international trade is accounted for at the manufacturing level, industry operators still target cross-border downstream markets, such as US automobile and heavy-duty truck dealerships,” according to IBISWorld Industry Analyst Brandon Ruiz. As per capita disposable income continues to rise off a low recessionary base, demand for new vehicles is expected to follow suit. To this end, IBISWorld expects industry revenue to grow at an annualized rate of 4.3% to $58.3 billion over the five years to 2014, lifted by an estimated 0.5% in 2014 alone.
Industry profit margins are anticipated to increase; however, the rising world price of crude oil is expected to hamper profit growth. “Since industry operators primarily act as a distributor, transporting vehicles from upstream manufacturers to downstream dealers, transportation costs are a key expenditure and influence overall profit margins,” says Ruiz. Consequently, as the world price of crude oil rises, transportation costs will follow suit. Fortunately for the industry, vehicles are becoming more fuel-efficient in light of stricter emission regulatory standards and rising energy prices, which may alleviate these cost pressures.
Revenue for the Automobile Wholesaling industry is expected to continue to trend higher over the five years to 2019. However, there are threats that can potentially derail the industry's upward trajectory. For example, interest rates are anticipated to increase over the five-year period, lifting borrowing costs and thus deterring demand for big-ticket purchases, such as new automobiles. Moreover, the world price of crude oil is anticipated to rise, which will likely impact demand for fuel-inefficient vehicles, particularly heavy-duty trucks. Despite these trends, positive economic conditions, such as rising disposable income, are expected to lift industry revenue higher.
For more information, visit IBISWorld’s Automobile Wholesaling in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry wholesales a wide range of new and used vehicles, including automobiles, light trucks, motor homes, heavy-duty trucks, trailers and motorcycles. Automobile wholesalers do not sell motor vehicle parts or tires.
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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