As trade activity increases, downstream freight operators have increased their vehicle fleets, lifting industry demand
New York, NY (PRWEB) April 14, 2015
In the five years to 2015, revenue for the Truck and Bus Manufacturing industry is expected to increase, bolstered by a resurgence in trade activity. As trade activity trends higher, downstream freight operators have responded by increasing their vehicle fleets, lifting demand at the manufacturing level. The depreciation of the Canadian dollar relative to other currencies is expected to catalyze trade flows, particularly exports. Over the five-year period, the value of the Canadian dollar is anticipated to depreciate. Consequently, the industry is anticipated to benefit as exports account for a significant portion of industry revenue. Due to these positive trends, IBISWorld expects industry revenue to increase over the five years to 2015.
According to IBISWorld Industry Analyst Brandon Ruiz, “the volatile price of crude oil, a major input for truck and bus users, along with emissions regulations, are forcing the industry to innovate and develop new engine technologies.” Because Canadian emission standards are harmonized with US regulations, industry operators are forced to invest more in research and development and incur additional compliance costs, which pose a threat to profitability. However, if Canadian emissions regulations were not harmonized with the stringent US standards, operators would be at a competitive disadvantage because they would not be providing their biggest market with a relevant product.
As the United States, the industry's largest export market, continues to recover, trade activity is anticipated to increase, which will bolster demand for freight transportation, and thus provide a significant bump to industry revenue. “To this end, revenue is expected to rise in the five years to 2020,” says Ruiz. However, potential threats exist that may inhibit the industry's growth. The industry is anticipated to face increased competition from operators in low-cost countries, such as Mexico. Like domestic operators, companies in Mexico benefit from the North American Free Trade Agreement, allowing them to trade duty free. Additionally, Mexico has an abundance of other free trade agreements that make it an attractive destination for operators reliant on trade. Consequently, industry operators may opt to expand in Mexico, rather than domestically, which will ultimately hamper revenue growth.
For more information, visit IBISWorld’s Truck and Bus Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
The Truck and Bus Manufacturing industry primarily manufacturers heavy-duty vehicles and heavy-duty vehicle chassis for highway use.
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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