High oil prices and reduced US export demand hindered the industry
New York, NY (PRWEB) February 04, 2015
Over the five years to 2015, the Car and Automobile Manufacturing industry has been on a bumpy road. The pace of the industry generally moves in lock step with export demand, particularly from the United States. According to IBISWorld Inudstry Analyst Brandon Ruiz, “expected to account for more than half of industry revenue in 2015, exports are the largest market for the industry.” Thus, as US demand for vehicles rebounded during the economic recovery, domestic operators benefited.
Although demand for vehicles has rebounded, industry operators have been gradually scaling back operations domestically in favour of manufacturing in neighbouring countries, such as the United States and Mexico. Operators in Mexico benefit from lower wage costs, which they can then pass on to downstream markets in the form of lower selling prices. Alternatively, the United States is experiencing a surge in reshoring activity due to greater government support for manufacturing operations. From 2011 to 2015, 3.5 million units of capacity will be added by automakers in North America, according to Morgan Stanley. Of that, Canada is expected to add only 110,000 units of capacity, just 3.0% of the total. The United States and Mexico are anticipated to receive 63.0% and 34.0% of the total, respectively. As a result, industry revenue is expected to fall over the five years to 2015.
Over the next five years, revenue for the Car and Automobile Manufacturing industry is expected to reach an inflection point and trend higher. Unlike the previous five-year period, global automotive investment is expected to increase, as demand for vehicles continues to rise. “Domestic operators are expected to experience stronger investment due to their well-trained workforce and automotive infrastructure, in addition to their reputation for quality,” says Ruiz. Moreover, improvements in economic conditions, particularly at the consumer level, are expected to promote demand for new vehicles. For example, per capita disposable income is anticipated to rise, which will stimulate demand for big-ticket purchases. As a result, industry revenue is expected to grow over the five years to 2020.
For more information, visit IBISWorld’s Car and Automobile Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
The Car and Automobile Manufacturing industry manufactures 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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