The high dollar has encouraged motor vehicle manufacturers to look overseas when sourcing parts and accessories, reducing industry demand.
Melbourne, Australia (PRWEB) October 05, 2014
Operators in the Motor Vehicle Parts and Accessories Manufacturing industry in Australia have endured difficult market conditions over the past five years. While positive consumer sentiment pushed new car sales to rebound following the global financial crisis, demand for locally manufactured parts and accessories has continued to decline. According to IBISWorld industry analyst David Whytcross, “shifting consumer demand towards imported cars and local motor vehicle manufacturers increasingly turning towards imported parts and accessories have led to a severe industry decline despite growth in exports.” Industry revenue is forecast to decline by 4.9% annualised over the five years through 2014-15. This includes a forecast fall of 6.1% in 2014-15, to $4.0 billion.
Over the past five years, high petrol prices have caused consumers to turn towards smaller, more fuel-efficient cars. Local motor vehicle manufacturers GM Holden and Ford have traditionally produced large cars such as the Holden Commodore and Ford Falcon. “Sales of imported new cars have risen over the past five years, while sales of locally manufactured vehicles have plummeted,” says Whytcross. The high Australian dollar has made local motor vehicle manufacturers even less price competitive, as imports have become significantly cheaper. The high dollar has also encouraged motor vehicle manufacturers to look overseas when sourcing parts and accessories, further reducing industry demand. The industry exhibits a low level of market share concentration. Major players include ARB Corporation Limited.
As a result of these factors, Toyota, GM Holden and Ford have announced that they will cease local manufacturing operations over the next five years. This will cause downstream demand for the products of the Motor Vehicle Parts and Accessories Manufacturing industry to nosedive. Many operators will be unable to continue with viable operations, causing the industry to shed revenue from its aftermarket sales because supplying exclusively to the aftermarket does not allow for profitable production runs. Operators that have developed export markets due to their technological innovation and are less reliant on local motor vehicle manufacturing have the best chance of survival.
For more information, visit IBISWorld’s Motor Vehicle Parts and Accessories Manufacturing industry in Australia report page.
Companies in the industry manufacture non-electrical motor parts and accessories. These companies may supply parts and accessories to motor vehicle manufacturers or the aftermarket. The industry does not include the manufacture of engines, motor vehicle bodies, car seats, windscreens or any part entirely made out of plastic or fibreglass.
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