Automotive Industry trends
What you need to know about automotive industry trends 2017:
- global market of vehicle engines and the parts is worth about $193bln and was growing over the past years (2011-2016) 1,3% annualy, it is further growth expacted,
- customers expacting further fuel efficiency,
- governments regulations to decrease emissions,
- despite of above mentioned there still is a lot of opportunities for manufaturers,
- more innovative solutions are expacted in engines,
- hybrid and other alernative fuel vehicles are getting more popular, that will influnce on requirements of motor vehicles manufacturers,
- one vehicle is using for a longer time, so this causes the higher demand on spare parts,
- especially high demand on spare parts is taking place on emarging markets e.g. India, Brazil, Russia, China, Thailand, Mexico or even Hungary or Poland.
- global market of vehicle parts and accessories is worth stout $2tr and was growing over past five years (2011-2016) 4,2% annualy, and further growth is expacted up to the prerecession level.
Opportunities and threats that new entrants are faced:
- Automotive Industry is operating globalny, so that each new player is obligated to create the network to be able to compete,
- because of legal regulations and requirements of assemblers the products need to be innovative, and this requires financial resources in research and development, including low or zero emission engines,
- periodically price cutting making that new players need to be low cost manufaturers, and this requires technology investment,
- discouraging may be the fact that between motor vehicle manufaturers and suppliers of engines and parts are existing long term contracts,
- global market of spare parts and accessories has low concentration, that means, there is many small players, and even big OEM players (Original Eqipment Manufaturers) have less than 5% market share; supply chain of this industry is multilayer (vehicle is made of a lot of parts so vehicle manufacturer order units from OEM supplier that is named tire I, tire I order from tire II, tire II from tire III and tire III from tire Iv, where tire IV is provider of Raw materials); the top four players have 5,1% revenue share, and top 75 players have revenue share 43,3%, the rest belongs to many small players around the world,
- however the market concetration increased over the past years thanks to bigger players expansion and purchase of the smaller.