Renewed domestic car demand will flow on to steering and suspension manufacturers
New York, NY (PRWEB) April 06, 2015
The Automobile Steering and Suspension Manufacturing industry has driven down a bumpy road during the five years to 2015, with fluctuating demand from automakers causing a substantial level of revenue volatility. Recessionary conditions and changing consumer preferences combined to devastate domestic automobile and light truck manufacturing, one of the largest sources of demand for steering and suspension components. High gasoline prices and environmental concerns pushed drivers away from large, gas-guzzling vehicles that domestic manufacturers typically produce, and toward fuel-efficient imported vehicles. As imports typically use foreign-made steering and suspension components, this shift decreased revenue for domestic producers.
Partially alleviating the woes of plummeting automobile production is the automotive parts aftermarket. “While only representing an estimated a small portion of industry sales, the aftermarket provided a beneficial revenue source during the downturn,” IBISWorld Economic Analyst Stephen Hoopes says in the updated report. As consumers held back on new car purchases, the rising stock of aging vehicles created a greater need for repair and replacement services, increasing demand for aftermarket steering and suspension parts. Rising disposable incomes and pent-up demand for new vehicles after the recession have also benefited the industry in recent years. As a result of these trends, and a recovery from a low base in 2010, industry revenue is expected to increase during the five years to 2015.
Over the five years to 2020, the industry is anticipated to experience steady growth. Automobile production will continue its postrecovery period rise as consumers continue to flock back to the market in light of general improvements in the US economy. As a result, steering and suspension manufacturers will benefit from higher demand from automakers. “Still, some threats are expected to hinder performance, including a growing market for imported steering and suspension products and the increased expectation of price reductions from large automakers,” Hoopes says in the updated report. Imported goods cut into demand for domestically produced products, while requests for automotive component price reductions throughout the duration of a contract will directly eat into profitability. Nevertheless, revenue is anticipated to increase over the five years to 2020, with profit margins remaining high throughout the period.
For more information, visit IBISWorld’s Automobile Steering & Suspension Manufacturing in the US industry report page.
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