Commercial Vehicles: A Global Strategic Business Report
San Jose, CA (Vocus/PRWEB) February 15, 2011
The automobile industry is influenced by a medley of factors including technology, price, competition and regulations. Several factors, both general and market-specific, are known to affect the industry performance. Automobile industry, being capital-intensive, reflects the macro and micro economic trends in the regional markets. Economic factors are mainly characterized by changes in government policies; fluctuation in exchange rates, varying inflation levels and automobile infrastructure in place, amongst other variables. Other microeconomic factors such as an open trade environment, the country’s tax policies towards automobile sector and availability of consumer finance also affect the industry’s growth prospects. Future growth in world light vehicle production is forecast to be led by India, China and other developing markets. Shifting of production bases to developing low cost markets is a prime reason cited for the expected growth. Growth in production capacity in European Union is subject to recovery of conventional brands and restoration of assembly in few countries such as Germany. Cost remains a vital issue in the marketplace and manufacturers worldwide are emphasizing on cost cuts both from a competitive angle as well as for survival in a profit-shrinking environment. Fluctuations in demand have resulted and will continue to result in cyclical overcapacity issues, which tend to aggravate during periods of economic bust.
The automobile industry has been one of the worst hit industries by the recession. Demand for cars witnessed hurting declines exacerbating the already existing woes of excess production capacities. The soft business climate, which characterized the industry even before the recession, worsened even further with the recession inducing punishing falls in auto sales, dragging industry’s major giants into the red. Global overcapacity reached its peak during the 2007-2009 economic recession when demand patterns crumbled across regional markets creating a huge supply glut in the international market. Plant closures, capacity idling, lower capacity utilization rates, and scaling back of operating capacity dotted the landscape during this period. The bailout packages offered as succor to the bleeding companies Chrysler, Ford and GM, stand testimony to the deterioration of the automotive sector. Key factors citied as responsible for declining vehicle sales include restricted access to credit, decline in purchasing power, reduction in household wealth, falling business confidence index, decline in per capita automobile travel and volatile fuel prices, which although currently jumpy are skewed more sharply for future upward corrections. All of these factors resulted in postponements of purchases, which translated into declines in new vehicle sales/registrations.
Commercial vehicles, especially, have been impacted with fleet owners focusing on maintaining existing vehicle fleets rather than purchase new vehicles. Additionally, since demand for light commercial vehicles is largely dependent on end-user industries like, logistics, distribution, and service sectors, low levels of economic activity, reduced consumer demand for manufactured goods/commodities and reduced municipality/government spends, took its toll on the market. For instance, the recession has come down especially hard on the transportation industry inducing reductions in passenger and cargo traffic. The trucking industry withstood the maximum impact with freezing of consumer spending and slowing levels of economic activity resulting in the collapse of global production & trade. Reduced size of loads, and half loads quelled the immediate need for fleet expansion in the trucking industry. In addition to scaling back on vehicle miles traveled, fleet owners also resorted to reducing the number of cars in their fleet, especially 'grey fleet'.
With the recession now having played out its part in full proportions and with the automotive industry having hitting rock bottom, a rebound is now seen as inevitable. Growth will be encouraged by the resurgence in fundamental macroeconomic growth drivers. While production cuts, continuous trimming of manufacturing capacities, and elimination of value added features to produce low-cost vehicles, have all been popular short-term strategies to cope with the recession, future strategies to emerge above the turbulence will essentially be skewed towards focus on green cars, and next generation automotive technologies. In the immediate short-term, the burden of overcapacity is expected to ease as demand recovers, and sales of new vehicles increases drying up the inventories in the supply chain. Stronger levels of demand recovery in the developed markets will help ease current overcapacity issues. Replenishing of depleting inventories in the supply chain in the post recession period, as a result of resurging production activities on wings of improving vehicle demand will require stronger communication chain between the consumer, dealer and the manufacturer, to ensure field inventories are carefully tracked to maintain supply and demand balance.
Post-recession, market for commercial vehicles flaunt the potential to wax at a robust rate in Asia, due to stronger economic growth, encouraging pace of industrialization, development of road infrastructure, and the yet wide scope for expansion of commercial vehicle fleet. Sales of medium and heavy commercial vehicles in China are expected to surge at a CAGR of 17% during the analysis period.
Major players in the marketplace include AB Volvo Group, UD Trucks Corporation, Chrysler Group LLC, Daimler AG, Fiat Industrial S.p.A., Ford Motor Company, General Motors Corp., Hino Motors Ltd., Honda Motor Co Ltd., Hyundai Motor Company, Isuzu Motors Ltd., Iveco, MAN Truck & Bus AG, Mitsubishi Fuso Truck and Bus Corporation, Navistar International Corporation, Nissan Motor Co Ltd., PACCAR Inc., Scania AB, Tata Motors Ltd., Toyota Motor Corp., Volkswagen AG, among others.
The research report titled “Commercial Vehicles: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, mergers, acquisitions and other strategic industry activities. The report provides sales and production figures (In Thousand Units) for major geographic markets including the United States, Canada, Japan, Europe (France, Germany, Italy, Spain, The UK, Russia, and Rest of Europe), Asia-Pacific (Australia, China, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand, and Rest of Asia-Pacific), Latin America (Argentina, Brazil, Mexico, and Rest of Latin America), and Rest of World. Product segments analyzed include Light Commercial Vehicles (LCV), Medium/Heavy Commercial Vehicle (MCV), Trucks, and Buses (as applicable in respective regional markets).
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