33611B SUV & Light Truck Manufacturing in The US Industry Report

WWW.IBISWORLD.
COM SUV & Light Truck Manufacturing in the USOctober 2017 1
Turbo charge: Stricter fuel efficiency standards

will boost demand for industry products
This report was provided to
Purdue University (2128197249)
by IBISWorld on 09 February 2018 in accordance with their license agreement with IBISWorld
IBISWorld Industry Report 33611b

SUV & Light Truck
Manufacturing in the US
October 2017 Iris Peters
2 About this Industry 16 International Trade 31 Revenue Volatility

2 Industry Definition 18 Business Locations 32 Regulation & Policy
2 Main Activities 33 Industry Assistance
2 Similar Industries 20 Competitive Landscape
2 Additional Resources 20 Market Share Concentration 34 Key Statistics
20 Key Success Factors 34 Industry Data
3 Industry at a Glance 21 Cost Structure Benchmarks 34 Annual Change
22 Basis of Competition 34 Key Ratios
4 Industry Performance 23 Barriers to Entry 35 Industry Financial Ratios
4 Executive Summary 23 Industry Globalization
4 Key External Drivers 36 Jargon & Glossary
6 Current Performance 25 Major Companies
8 Industry Outlook 25 Ford Motor Company
10 Industry Life Cycle 26 General Motors Company
27 Fiat Chrysler Automobiles NV
12 Products & Markets 28 Toyota Motor Corporation
12 Supply Chain
12 Products & Services 30 Operating Conditions
14 Demand Determinants 30 Capital Intensity
15 Major Markets 31 Technology & Systems
www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

WWW.IBISWORLD.COM SUV & Light Truck Manufacturing in the USOctober 2017 2
About this Industry
Industry Definition Companies in this industry manufacture (CUVs). They also manufacture light
light trucks and utility vehicles such as truck and utility vehicle chassis. This
vans, pickups, sport-utility vehicles industry excludes the manufacturing of
(SUVs), and crossover-utility vehicles cars and motorcycles.
Main Activities The primary activities of this industry are

Van manufacturing
Pick-up truck manufacturing
SUV and CUV manufacturing
Light truck and utility chassis manufacturing
The major products and services in this industry are

CUVs
Minivans
Pickup trucks
SUVs
Similar Industries 33611a Car & Automobile Manufacturing in the US

Operators in this industry manufacture cars.
33612 Truck & Bus Manufacturing in the US

Operators in this industry manufacture heavy trucks and buses.
33621 Truck, Trailer & Motor Home Manufacturing in the US

Operators in this industry manufacture car, truck and bus bodies and assemble vehicles on a purchased
chassis.
33699b Tank & Armored Vehicle Manufacturing in the US

Operators in this industry produce militarized versions of this industry’s products.
Additional Resources For additional information on this industry

www.autonews.com
Automotive News
www.nada.org
National Automobile Dealers Association
www.wardsauto.com
WardsAuto
Provided to: Purdue University (2128197249) | 09 February 2018

WWW.IBISWORLD.COM SUV & Light Truck Manufacturing in the US October 2017 3
Industry at a Glance
SUV & Light Truck Manufacturing in 2017
Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

Snapshot
$195.5bn 8.2% 2.1%
Profit Exports Businesses
$9.4bn $32.2bn 59
Revenue vs. employment growth Per capita disposable income
Market Share
Ford Motor 40 4
Company
14.8% 20 2
% change
% change
General Motors 0 0
Company
12.4% -20 -2
Fiat Chrysler
Automobiles NV -40
Year 09 11 13 15 17 19 21 23
-4
Year 11 13 15 17 19 21 23
9.9% Revenue Employment
Toyota Motor SOURCE: WWW.IBISWORLD.COM
Corporation Products and services segmentation (2017)

9.0%
5.1%
p. 25 Minivan
17.3%
Key External Drivers SUVs
Regulation for the
automotive sector
Per capita disposable
income
World price of crude oil
50.9%
CUVs
Trade-weighted index
Yield on 10-year
Treasury note
26.7%
Pickup trucks
p. 4
SOURCE:
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Mature Regulation Level Medium

Revenue Volatility Medium Technology Change High
Capital Intensity High Barriers to Entry High
Industry Assistance Medium Industry Globalization High
Concentration Level High Competition Level High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 34

Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive The SUV and Light Truck Manufacturing five years have significantly influenced
Summary industry is expected to continue manufacturer operations. For example,
improving over the five years to 2017. there have been updates in the Corporate
Heavy buying activity from key Average Fuel Economy (CAFE)
downstream markets and general regulations, requiring that an average
improvements in the domestic economy 54.5 miles per gallon fuel economy for
are anticipated to bolster revenue growth. large light trucks and SUVs be met by
Moreover, companies that restructured model-year 2025. While this would
prior to the five-year period, such as GM, increase costs in the short-term, it would
are now better prepared to compete on a ultimately increase demand in the long
global scale. Additionally, automakers run. However, in 2017, the Trump
responded to consumers’ environmental administration announced it would
concerns by offering expanded hybrid reopen a review of the light-duty vehicle
and crossover-utility vehicle (CUV) lines. regulations in response to many concerns
from auto manufacturers. This review
could reverse or lessen the current
Thegovernment, as well as many automakers, standards for automakers, which will
are increasingly considering consumer most likely shake up the industry.
Over the next five years, automakers
concerns regarding fuel economy will focus on producing CUVs and trucks
with an emphasis on improved fuel
As a result, the popularity of hybrids and efficiency to meet regulatory mandates. To
CUVs supplanted most sport-utility meet these fuel-efficiency standards,
vehicle (SUV) demand; CUVs are industry operators are expected to provide
expected to account for 50.9% of all additional powertrain options, including
revenue in 2017. Over the five years to clean diesel and hybrids. However, rising
2017, the strong improvement is expected oil prices are expected to threaten demand
to lift revenue at an annualized 8.2% to for industry products, as they often are
$195.5 billion, with an estimated 3.2% less fuel efficient than smaller passenger
increase in 2017. cars and sedans. Nevertheless, rising
The government, as well as many disposable income is forecast to propel
automakers, are increasingly taking industry revenue higher. As a result,
consumer concerns regarding fuel industry revenue is projected to grow at an
economy into consideration. Therefore, annualized rate of 2.1% to $217.2 billion
major government programs in the past over the five years to 2022.
Key External Drivers Regulation for the automotive sector production costs will outweigh the
Profitability in this industry is negatively benefits of catering to changing consumer
affected by fuel-efficiency standards and preferences. Regulation for the
the costs manufacturers incur to reach automotive sector is expected to increase
them. Automakers incur costs through in 2017.
research and development on new
technology, expensive manufacturing Per capita disposable income
processes and fines for not complying Per capita disposable income determines
with government standards. While the price range of a consumer’s vehicle
consumers are leaning toward purchase and what kind of vehicle a
environmentally friendly vehicles, higher consumer can afford. Per capita

Key External Drivers disposable income is expected to increase competitive. An appreciation of the US
continued in 2017, representing a potential dollar typically leads to a fall in exports,
opportunity for the industry. which has a negative effect on industry
revenue. The trade-weighted index is
World price of crude oil expected to decrease in 2017.
The price of gas is a significant part of a
vehicle’s running costs. Light trucks and Yield on 10-year Treasury note
SUVs are particularly fuel-inefficient, Interest rates influence auto and lease
making them more sensitive to higher costs and therefore have a direct effect
gasoline prices. The world price of crude on consumers’ ability to purchase
oil is expected to increase in 2017, posing vehicles. When interest rates are
a potential threat to the industry. relatively low, consumers are able to
finance vehicles at a more affordable
Trade-weighted index rate, thus driving demand. The yield on
Exchange rates play a significant part in the 10-year Treasury note is expected to
the industry’s ability to remain increase in 2017.
Per capita disposable income Trade-weighted index
4 105
100
2
95
% change
Index
0
90
-2
85
-4 80
Year 11 13 15 17 19 21 23 Year 09 11 13 15 17 19 21 23

Current Over the five years to 2017, revenue for

the SUV and Light Truck Manufacturing Revenue vs. exports
Performance industry is expected to trend higher.
60
Demand for high-margin sport-utility
vehicles (SUVs) and light trucks peaked 40
in the early 2000s, but the credit crisis 20
undermined industry profitability.
% change
Nevertheless, heavy buying activity from 0
key downstream markets is expected to -20
help revenue expand over the five years
to 2017. IBISWorld expects industry -40
revenue to increase at an annualized rate -60
of 8.2% to $195.5 billion over the five- Year 09 11 13 15 17 19 21 23
year period, bolstered by rising Revenue Exports
disposable incomes and low interest SOURCE: WWW.IBISWORLD.COM
rates. Moreover, industry revenue is

anticipated to increase an estimated 3.2% establishments is expected to fall at an
in 2017 alone. annualized rate of 1.6% to 72 locations in
However, despite improving economic the five years to 2017. Conversely, many
conditions and increased demand for new industry operators, such as Ford, are
vehicles, the industry has experienced including a third production shift at
offshoring activity. In attempts to decrease domestic operations to meet rising
operating costs, automakers have been demand for new vehicles. Consequently,
moving operations to countries where employment is expected to rise at an
wage costs are lower, such as Mexico. As a annualized rate of 10.5% to 93,034
result, the number of industry workers over the five years to 2017.
International trade Over the five years to 2017, domestic seek more favorable markets abroad.
auto manufacturers have worked on Moreover, the North American Free
building back the large international Trade Agreement boosts export figures;
presence that was tarnished during the in particular, trade with Canada has
economic downturn. IBISWorld expects comprised the majority of exports over
industry exports to rise, growing at an the past five years. Imports are also
annualized rate of 0.3% to $32.2 billion expected to grow, lifted by rising
over the five years to 2017. Falling disposable incomes and low interest rate
domestic demand for light trucks and levels. IBISWorld expects imports to
SUVs caused manufacturers to re- grow at an annualized rate of 5.0% to
emphasize their export segment and $122.7 billion in the five years to 2017.
Government Prior to the five-year period, the US reduction in demand. Nevertheless, mere
intervention government approved a bailout of months after the second bailouts, GM
cash-strapped General Motors (GM) and and Chrysler both filed for bankruptcy,
Chrysler. A second bailout was approved and in June 2011, Chrysler was bought
in early 2009 as both companies out by Italian automaker Fiat and
continued to struggle with a severe emerged from bankruptcy.

Government Although these events took place United States more affordable two-tier
intervention outside of the five-year period, they wage structure. In this structure, entry-
illustrate the government’s support for level employees earn a lower wage than
continued
the automotive industry and its emphasis veteran employees performing the same
on maintaining domestic manufacturing job. Consequently, while many
facilities. As a result, this has spurred automakers have moved operations
increased reshoring activity. Another abroad, reshoring has helped prevent
factor driving reshoring activity is the more significant establishment declines.
The customer is Despite a resurgence in demand for SUVs

always right and lights trucks, industry operators still Operatorshave successfully
experience hurdles that will likely hinder
growth prospects. Fortunately for industry
accommodated consumer
operators, industry performance largely needs by expanding their
hinges on consumer sentiment and product lines
purchasing power, and both have been
strong since 2012. However, gas prices
also strongly affect demand, as light trucks car platforms and lack some of the utility
and SUVs typically get fewer miles per capabilities of the traditional SUV, but
gallon than most cars. The price of gas has have ample cargo and passenger room
declined significantly in the past five with superior gas mileage and safety
years, and as a result, demand for light characteristics. In addition,
trucks and SUVs trended upward, manufacturers increased spending on
bolstering industry revenue. research and development to transfer
Industry operators took note of hybrid technologies and drivetrains to
changing consumer preferences and have their popular truck and SUV models.
successfully accommodated consumer Industry operators understand that
needs by expanding their product lines. increased attention to innovation can
Many companies are beginning to include improve revenue and profitability by
crossover-utility vehicles among their meeting consumer demand for more
products. These new models are based on practical and fuel-efficient vehicles.

Industry Improving consumer sentiment and per

capita disposable income over the next
major companies introduced in recent
years. These vehicles have steadily gained
Outlook five years will drive revenue growth for market presence and will continue to
the SUV and Light Truck Manufacturing support industry revenue growth.
industry. In addition, major players will Conversely, rising gasoline prices
outfit trucks and sport-utility vehicles threaten this outlook; even with
(SUVs) with hybrid drivetrains and improvements, the gas mileage of trucks
improve fuel efficiency, as rising and SUVs will remain generally inferior
government-mandated fuel standards to that of sedans and wagons.
will accelerate the shift toward more Nevertheless, IBISWorld anticipates that
fuel-efficient vehicles. Moreover, total in the five years to 2022, revenue will
industry revenue will be aided by the grow at an annualized rate of 2.1% to
rising popularity of fuel-efficient $217.2 billion, including an increase of
crossover-utility vehicles (CUVs) that 2.4% in 2018.
Financial stability Industry operators will look to address

the changing preferences of customers Industry operators will look
and combat volatile oil prices to revive
performance over the next five years. A
to address the changing
large part of the revenue growth over the preferences of customers
next five years will be due to US-owned over the period
manufacturers’ efforts toward increasing
their international sales. Exports are
estimated to grow at an annualized rate manufacturers’ ability to maintain their
of 0.2% to $32.4 billion over the five restructured operation strategies,
years to 2022. Additionally, imports are keeping costs down while ramping up
expected to grow at an annualized rate of production. As sales continue to climb,
2.6% to $139.2 billion over the next five manufacturers will slowly add on more
years, supported by rising demand for employees and expand production to
foreign vehicles. Additionally, an keep up with rising demand. To this end,
appreciating US dollar is expected to lift employment is anticipated to grow at an
imports. As the US dollar appreciates, annualized rate of 1.4% to 99,957 people
vehicles abroad will become relatively in the five years to 2022. However,
less expensive, and therefore more industry operators are expected to focus
desirable. However, this does pose a on improving efficiency of their
potential threat to exports as they manufacturing processes by updating
become more expensive for markets current production plants with the latest
abroad, which is why export growth is automation technology, while also
anticipated to be subdued. moving some operations abroad to lower
Profit margins are expected to grow as wage costs. As a result, the number of
manufacturers continue to rely on establishments is forecast to decline at an
cost-efficient business models. This annualized rate of just 0.3% to 71
industry’s profitability hinges largely on locations during the five-year period.

Fuel economy Corporate Average Fuel Economy (CAFE)

requirements set by the Obama High
fuel economy
administration in July 2011 will encourage
automakers to restructure their vehicle
standards will offer growth
product lines to meet the industry- opportunities for the
standard average fuel economy of 54.5 industry
miles per gallon (mpg) by 2025 for all
light trucks and SUVs. The plan sets
fuel-efficiency standards to improve in fuel-efficient truck and SUV models, and
annual increments. Though automakers will likely continue to drive demand for
will incur higher production costs in fuel-efficient vehicles over the next five
meeting these goals, updated standards years. However, at the same time,
also offer opportunities for further growth consumers may opt for smaller, more
in sales of the industry’s fuel-efficient fuel-efficient passenger vehicles and
product line. High gas prices have sedans, which are not included in this
prompted consumers to favor hybrid and industry, threatening industry growth.

Life Cycle Stage Demand for light trucks is recovering
from a low recessionary base
Brand consolidation and vehicle
phase-outs are common
New engine technologies are increasing
demand for trucks and SUVs
20 Maturity Quality Growth

% Growth in share of economy
Key Features of a Mature Industry

Company High growth in economic
consolidation; importance; weaker companies Revenue grows at same pace as economy
level of economic close down; developed Company numbers stabilize; M&A stage
importance stable technology and markets Established technology & processes
Total market acceptance of product & brand
15 Rationalization of low margin products & brands
10
SUV & Light Truck Manufacturing
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
5 technology change
New Car Dealers Automobile Wholesaling

0
Truck & Bus Manufacturing Car & Automobile Manufacturing
Iron & Steel Manufacturing
-5 Decline
Shrinking economic
importance
-10
-10 -5 0 5 10 15 20
% Growth in number of establishments

Industry Life Cycle The SUV and Light Truck Industry output has increased due to
Manufacturing industry is in the overall economic improvements and rising
mature stage of its life cycle. Its consumer confidence. Additionally, the
Thisindustry industry value added (IVA), which price of steel declined significantly in the
is M
ature measures the industry’s contribution to past five years, leading to increased profit
the overall economy, is expected to margins. However, many companies
grow at an annualized rate of 11.6% in restructured their business models during
the 10 years to 2022. In comparison, the past 10 years, which contributed to the
the US economy is expected to grow at industry’s stagnant growth in domestic
an annualized rate of 2.0% over the establishments. Moreover, the industry
same 10-year period. Although the SUV experienced major mergers and
and Light Truck Manufacturing acquisitions as a result of restructuring.
industry is expected to grow at a higher Nevertheless, automakers are looking
rate than the overall economy, this is toward development of automated
primarily due to the industry coming off technological operating processes that will
a low base and subsequently rebounding help cut costs and make manufacturing
as economic conditions improved. more efficient.

Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES

42311 Automobile Wholesaling in the US
The industry distributes light duty trucks and utility vehicles to franchised and independent
dealerships.
44111 New Car Dealers in the US
New car dealers retail light trucks and SUVs across the United States.
53211 Car Rental in the US
Car rental and leasing companies are major purchasers of new light trucks and utility vehicles.
KEY SELLING INDUSTRIES

33111 Iron & Steel Manufacturing in the US
Major supplier of raw materials to the industry to produce stamped products.
33591 Battery Manufacturing in the US
Supplier of motor vehicle batteries to industry.
33631 Automobile Engine & Parts Manufacturing in the US
Major supplier of motor vehicle engines to this industry.
33632 Automobile Electronics Manufacturing in the US
Major supplier of electrical and electronic equipment to the industry.
33633 Automobile Steering & Suspension Manufacturing in the US
Major supplier of steering modules and suspension components to the industry.
33634 Automobile Brakes Manufacturing in the US
Major supplier of brakes to this industry.
33635 Automobile Transmission Manufacturing in the US
Major supplier of transmission and power train equipment to the industry.
33636 Automobile Interior Manufacturing in the US
Major supplier of seating modules and interior trim products to the industry.
33637 Automobile Metal Stamping in the US
Major suppliers of stamped products to the industry.
Products & Services This industry produces vans, trucks and the five-year period altered consumer
sport-utility vehicles (SUVs). The preferences for large vehicles with poor
automotive marketplace is one of fuel economy. Standard SUVs suffer from
constant change and innovation that very low gas mileage comparable with
continuously creates new product that of a full-size pickup truck. High gas
platforms. IBISWorld segments industry prices caused a rapid shift in the
product types into three main categories: popularity of SUVs, and the vehicles
vans, trucks and SUVs, each consisting of became less popular. To combat this
two subcategories. trend, many automakers began
implementing new, hybrid drivetrain
SUVs and CUVs technologies in SUVs to help raise fuel
SUVs are fully enclosed vehicles similar economy. However, gas prices started to
to station wagons but built on a light fall in 2013 and are expected to continue
truck chassis. These vehicles, such as the declining at an annualized rate of 13.1%
Jeep Wrangler, were originally known for in the five years to 2017. As a result,
their excellent off-road capabilities. demand for larger vehicles, such as SUVs
Rising gas prices during the early part of and light trucks have gained steam and

Products & Markets
Products & Services Products and services segmentation (2017)

continued
5.1%
Minivan
17.3%
SUVs
50.9%
CUVs
26.7%
Pickup trucks
Total $195.5bn SOURCE: WWW.IBISWORLD.COM
are expected to make up 17.3% of trucks still belong to Japanese

industry revenue in 2017. automakers, with the Toyota Tacoma and
CUVs are similar in form to SUVs but Nissan Frontier being the frontrunners in
are built on a passenger car chassis. this category. However, in general, sales
CUVs lack the towing and off-road of compact pickup trucks have fallen over
capabilities of SUVs but offer superior the past five years because of the rise in
gas mileage and safety characteristics. In popularity of smaller SUVs and
addition, automakers largely applied crossover-utility vehicles (CUV) models.
their new hybrid technologies to CUVs Consumers have trended toward these
before SUVs and pickups. This models instead of compact pickup trucks
combination of characteristics helped because of fuel efficiency, higher
CUVs gain the attention and favoritism passenger capacity and equal towing and
from consumers, accounting for 50.9% of cargo capabilities.
sales in 2017, despite still being a Full-size pickup trucks are appropriate
relatively new product line. Examples of for use by small businesses and consumers
CUVs include the Ford Flex, Toyota with significant towing needs, but most
Venza and Dodge Journey. In addition, models come with a large-displacement
many traditional SUVs, such as the Ford V8 engine, resulting in poor fuel economy.
Explorer, have been moved to CUV This segment is particularly resilient to
platforms in recent years. fluctuations in gasoline prices, as few
vehicles offer comparable utility; although,
Pickup trucks the segment has lost some of its market
Compact pickup trucks represent a small share to the growing popularity of CUVs
portion of industry revenue. This and SUVs that now sport new fuel-
segment emerged in the 1980s with the efficient hybrid drivetrains.
importation of small Japanese trucks.
Domestic automakers quickly followed Minivans and vans
suit and began selling similarly sized This segment includes minivans and class
trucks under their own brands. Compact 3 trucks, which are utility vans,
trucks are oriented toward consumers multipurpose vans, mini buses and step
who value mileage over towing capacity. vans. Class 3 vehicles weight between
In 2017, a majority of sales of compact 10,001 to 14,000 lbs. Small vans, also

Products & Markets
Products & Services known as minivans, are geared to Toyota maintain a large share of sales,
continued transport six or more people comfortably, with the Honda Odyssey and Toyota
and are particularly popular with taxi Sienna leading the way.
services and suburban families. Minivans Vans are large, boxy vehicles designed to
are equipped with relatively small carry as many passengers or as much cargo
engines, offering good fuel economy as possible. Cargo vans come equipped
relative to the size and passenger capacity with two seats in the front of the vehicle,
of the vehicle. Minivans, unlike SUVs or with the rest of the space left empty for
trucks, are typically front-wheel drive, cargo. This type of van is popular with
and this arrangement reduces weight by small businesses and transport services.
eliminating the need for a differential, Passenger vans typically come equipped
but offers less desirable handling with three to four rows of bench seating
characteristics. This segment has behind the driver. Over the five years to
gradually shrunk in light of the 2017, this segment is expected to decline as
popularity of CUV and small SUV a share of overall revenue due to
models. Japanese automakers Honda and competition from SUVs and CUVs.
Demand Gasoline prices, disposable income, success. These early hybrid truck models
Determinants vehicle affordability and interest rates provided limited fuel economy benefits
influence demand for trucks and sport- at an expensive premium over
utility vehicles (SUVs). This industry’s conventional models. Currently,
products are heavily used by small and Companies in this industry are seeking
large businesses, particularly in the to limit risk from high gasoline prices by
construction and agriculture sectors. offering more fuel-efficient diesel and
Demand from businesses tends to be hybrid trucks.
reliable and frequent, despite their Vehicle affordability, disposable
sensitivity to business cycles. income and interest rates influence truck
Additionally, qualitative factors, such as sales by affecting consumer purchasing
consumer preferences, can shift demand power. When interest rates are relatively
to and from other automotive industries. high, consumers’ cost of leasing vehicles
Gasoline prices have a particularly increases. The more expensive a vehicle
strong relationship with truck sales, as is relative to the purchaser’s disposable
trucks are particularly fuel-inefficient income, the less likely a sale.
vehicles. Volatile gasoline prices and American consumers have been
rising concern over climate change has changing their automotive preferences
curbed consumer sentiment for larger rapidly since the recession. For much of
vehicles and made fuel efficiency a high the decade, fuel prices were low, enabling
consumer priority. In turn, industry Americans to become accustomed to
operators such as General Motors driving large vehicles. However, the rapid
introduced hybrid powertrains for some escalation of gasoline prices caused a
truck and SUV models, but with limited major shift toward smaller vehicles.

Products & Markets
Major Markets Major market segmentation (2017)

3.2%
11.6% Government
Leasing companies
34.9%
Wholesalers
16.5%
Exports
33.8%
Automobile dealers
Total $195.5bn SOURCE: WWW.IBISWORLD.COM
Automakers use a variety of distribution Automobile dealerships

channels to sell their vehicles to the Automobile dealerships are expected to
public. Car dealerships and wholesalers directly purchase 33.8% of this industry’s
sell vehicles primarily to consumers and products in 2017. Dealers sell the vast
businesses. Exports account for a majority of their vehicles directly to
significant share of industry revenue, consumers. New car dealerships share of
with 30.3% of exports destined for revenue is expected to trend higher over
Canada. Government agencies, including the five years to 2017, bolstered by low
local and federal law enforcement, interest rates. As interest rates remain at
directly purchase 3.2% of all light trucks historically low levels, consumers are
and SUVs. Vehicle leasing companies, more apt to finance new vehicle
including automaker subsidiaries and purchases, lifting this segment’s share of
independent companies, lease vehicles to overall revenue higher.
consumers and businesses.
Exports
Wholesalers Exports are expected to account for 16.5%
Wholesalers are the largest market of revenue in 2017. Canada, Germany and
segment of this industry and expected to China are the top destinations for light
account for 34.9% of industry revenue in trucks and SUVs. Operations of domestic
2017. Wholesalers buy large volumes of automakers such as General Motors’ Opel
identical vehicles from automakers. in Germany explain most of this activity.
They then sell vehicle fleets to Exports fall when the dollar strengthens
businesses such as taxi services, rental against other trading partners’ currencies.
companies and dealerships. Demand Growing exports reflects the increasing
from wholesalers is driven by business wealth and demand for large vehicles in
investment and gasoline prices. developing countries as well as the relative
Dealerships buy vehicles from decline in domestic popularity for these
wholesalers to supplement inventories; vehicles. Proportions between other
wholesalers provide faster delivery than market segments have remained
directly purchasing from automakers. consistent over the past five years.

Products & Markets
International Trade Over the five years to 2017, exports are

expected to grow at an annualized rate of Industry trade balance
Level & Trend 0.3% to $32.2 billion. The four largest

50
export destinations are Canada, China,
xports in the
E Germany and Mexico. The North American
industry are Free Trade Agreement eliminates tariff 0
Mediumand S teady barriers between the United States, Mexico,
$ billion
and Canada, which enables manufacturers -50
Imports in the to maintain many facilities on either side of
industry are H igh the border. These strategic manufacturing -100
and I ncreasing locations helped boost export figures over
the past five years. General Motors’ (GM) -150
ownership of Opel, a Germany-based Year 09 11 13 15 17 19 21 23
automaker, accounts for much of the Exports Imports Balance
shipments to Germany. There, GM vehicles SOURCE: WWW.IBISWORLD.COM
are often rebranded as Opel vehicles. Over

the next five years, exports as a percentage Over the five years to 2017, imports are
of revenue is expected to decrease, as expected to grow at an annualized rate
rising interest rates may pose a potential 5.0% to $122.7 billion due to rising
threat to export growth. Moreover, the US demand for foreign vehicles. As the US
dollar is expected to continue dollar appreciates, vehicles abroad
appreciating; albeit at a much slower rate become less expensive, bolstering import
than the previous period, and therefore, demand. Most trucks and SUVs were
US vehicles will become more expensive sourced from Japan, Canada and
for markets abroad. Germany. Imports will start to increase
Exports To... Imports From...
12.2%
Germany
5.8%
Mexico
24.4%
Canada
11.8%
Germany
30.3%
Canada 16.2%
Mexico
22.4%
China
29.7% 23.8%
Other Other
23.4%
Japan
Year: 2017 Total $32.2bn Total $122.7bn

SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA SOURCE: USITC

Products & Markets
International Trade again over the next five years as the US

continued economy slowly recovers, enabling
domestic automakers to both export and
import more during the period.

Products & Markets
Business Locations 2017
West
AK
0.0 New
England
ME
Great Mid- 0.0
Lakes Atlantic 1 2
NY 3
WA MT ND 1.3
5 4
1.3 1.3 MN
Rocky
1.3 1.3
WI
OR Mountains SD
0.0
Plains 2.6 MI
7.9
PA
0.0
6
7
1.3 ID IA OH 9 8
0.0 WY 5.3
1.3
NE
0.0
IL IN WV VA
6.6 7.9 1.3
West NV
1.3 0.0
KY
UT MO
5.3 NC
1.3
0.0 CO KS 4.0 2.6
2.6 1.3 TN
SC
Southeast
1.3
CA 2.6
11.8
OK AR GA
0.0 0.0 AL 1.3
AZ MS 5.3
1.3 NM
0.0 Southwest 0.0
TX LA
0.0 FL
6.6 5.3
West
HI
0.0 Additional States (as marked on map) Establishments (%)
1 VT 2 NH 3 MA 4 RI Less than 3%
0.0 0.0 0.0 0.0 3% to less than 10%
10% to less than 20%
5 CT 6 NJ 7 DE 8 MD 9 DC
20% or more
0.0 3.9 0.0 1.3 0.0

Products & Markets
Business Locations Automotive manufacturing activities are

Distribution of establishments vs. population
most prevalent in the Great Lakes region,
especially Michigan, where the three
40
domestic manufacturers are
headquartered. To this end, Michigan is
30
expected to account for 7.9% of industry
establishments in 2017, which is the
second-largest share next to California. 20
%
California is home to the American
headquarters of many Japanese and 10
Korean automakers. Moreover, Asian
automakers typically import near- 0
complete vehicles from overseas factories
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
and perform final assembly there.
California benefits from this as it is
geographically closer to Asia compared
with the east coast. California is expected Establishments
to account for 11.8% of industry Population
establishments in 2017.The Southeast SOURCE: WWW.IBISWORLD.COM
and West regions have also become

automotive hubs over the past 20 years, Nissan manufacture complete vehicles
as foreign manufacturers began there. State governments in the Southeast
production within the United States. The have been eager to attract these
Southeast has grown rapidly over the employers, offering incentives and tax
past two decades as Toyota, Honda and breaks for new facilities.

Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share Vehicle manufacturing is a highly pitfalls. As a result, US automakers have

Concentration competitive business dominated by increased their share of domestic
companies with a significant demand. Foreign-owned manufacturers
international presence. The four largest have had difficulty penetrating the
Level
producers of light trucks and sport-utility full-size pickup truck segment but excel
Concentration in vehicles (SUVs) are General Motors, in the SUV and small-van segments.
this industry is H
igh Ford, Chrysler and Toyota. These four Recent product development trends have
companies are expected to account for also resulted in popular crossover and
about 46.0% of industry revenue. The crossover-utility vehicle models, such as
next largest producer, Honda, accounts the Toyota Venza and Honda Element,
for 4.8% of industry revenue. helping these companies increase their
Prior to the five-year period, Japanese popularity among consumers. Market
automakers Honda and Toyota both took share concentration had gradually
a large hit in production and revenue as a declined for over a decade, and
result of the early 2011 Japan earthquake. IBISWorld expects concentration to
Both companies continued to experience continue its decline as other foreign
depressed revenue growth in 2012, as companies such as Volkswagen and
they attempted to recover from the Hyundai-Kia make strides in the US
earthquake as well as other economic truck and SUV market.
Key Success Factors Product portfolio matches Access to the latest available and most
customer demand efficient technology and techniques
Consumers’ vehicle preferences are The most successful manufacturers use
IBISWorld identifies subject to radical change from year to the most advanced manufacturing
250 Key Success year. SUVs began losing favor before technologies. In particular, a high
Factors for a 2007 due to rising gas prices. level of automation and quality control
business. The most Manufacturers dedicated to research and is necessary.
development to enhance their product
important for this
line succeed among consumers. Optimum capacity utilization
industry are: Manufacturers with high levels of idle
Flexible cost structures production capacity will have difficulty
Widespread and powerful unions make making a profit. Successful
labor expenses highly rigid in this manufacturers need to constantly align
industry; this inflexibility makes it capacity to market demand.
difficult to operate profitably when
demand falls. Development of new products
Manufacturers must constantly
Establishment of export markets introduce new products or change
Emerging markets are expected to existing products to maintain consumer
account for an increasing share of interest. In recent years, new models
global automotive demand. Successful such as CUVs and crossovers along with
manufacturers need a foothold in enhanced hybrid drivetrains have
such markets. garnered large consumer attention.

Cost Structure Profit transmissions, radiators and electronics

Benchmarks Profit margins are trending upward as are purchased from variety of upstream
the economy continues to improve. For suppliers. Industry operators contain cost
example, General Motors and Ford fluctuations by purchasing parts under
experienced double-digit profit margin contract with suppliers, which usually
growth over the five years to 2017. Their include provisions mandating annual
restructured business models have paid price decreases. Furthermore, automakers
off with increased profit margins, largely typically have long-term relationships and
due to revamped product lines that contracts with a handful of large
address consumer preferences and automotive suppliers to reduce costs.
innovation of production processes that Purchases are expected to account for
cut overall costs. As a result, industry 75.4% of industry revenue in 2017.
profit is expected to make up 4.8% of
revenue in 2017 up from 1.0% in 2012. Wages
Wages make up the third-largest
Purchases component of this industry’s cost
Light truck and SUV manufacturing structure, making up 4.0% of revenue in
requires a large array of component parts 2017. The Big Three had struggled to
that auto manufacturers acquire from maintain profitability under very
suppliers. For the most part, automakers expensive labor contracts, which included
primarily perform the final assembly and defined-benefit pensions, limiting
design of vehicles. As a result, vehicle companies’ ability to fire union workers.
components, such as engines, As a result, average wages were highly
Sector vs. Industry Costs
Average Costs of
all Industries in Industry Costs
sector (2017) (2017)
100
7.3 4.8 n Profit
4.0 n Wages
11.8 n Purchases
80 n Depreciation
n Marketing
n Rent & Utilities
n Other
Percentage of revenue
60
55.6 75.4
40
2.5 0.5
20 2.2
0.7 2.2
19.7 2.2
10.7
0

Cost Structure inflated in this industry at more than market trucks and SUVs with lower
Benchmarks $80,000.00. The long-term relationship prices or higher quality than those from
between the automakers and the United unionized competitors.
continued
Auto Workers (UAW) union, which
remains in question, will play a Research and development
tremendous role in the future cost and other costs
structure and success of this industry. Other costs associated with this industry
High labor costs (guaranteed under include research and development and
union contracts), along with other general machine and building
factors, have historically been a major maintenance. Industry operators have
impetus to poor short-term management increased research and development
decisions. For example, US automakers costs to 6.2% of industry costs as they
began to rely on truck and SUV sales look to innovate more quickly and
because of their higher gross margins to efficiently than their competitors.
counteract inflated labor costs. Innovation includes both updating
Manufacturers that continue signing product lines with new technologies to
labor contracts favoring the UAW will maintain consumer interest and updating
struggle to compete with nonunion production process technologies to
manufacturers that can offer mass- reduce operating and wage costs.
Basis of Competition Internal competition regular cab compact truck to $66,000.00

For light trucks and SUVs, automakers for the Cadillac Escalade EXT premium
Level & Trend compete primarily on the basis of price, full-size truck. The two vehicles are
fuel economy, reliability, styling and marketed to different market segments.
ompetition
C in this utility. Business customers and Business customers have become
industry is H
ighand consumers place different weights on increasingly concerned with fuel
the trend is S teady each trait; businesses tend to emphasize economy over the past five years. The
utility and reliability, while consumers SUV product segment is diminishing
are more concerned with price, fuel because of its fuel inefficiencies
economy and styling. Automakers compared with alternatives. Depending
periodically redesign a vehicle’s styling on vehicle type and automaker,
(typically every five years) but only manufacturers are addressing these
occasionally change the vehicle’s concerns with smaller engines, hybrid
mechanics. From a sales perspective, drivetrains or revised vehicle platforms.
stylistic changes are more important for Ford began offering a V6 EcoBoost
sport-utility vehicles (SUVs), crossover- engine in its F-series pickups in 2010.
utility vehicles (CUVs) and minivans than The V6 EcoBoost engine produces power
for trucks because these vehicles, unlike comparable with a much larger V8 engine
trucks, are purchased in greater numbers but with 15.0% less fuel.
by consumers than businesses. Reliability is a pervasive concern of all
Industry customers choose their vehicle shoppers. These concerns were
vehicle purchases on the basis of price. more pressing a decade ago when
Each vehicle platform (SUVs, CUVs, vans domestic automakers noticeably lagged
and trucks) has a premium subcategory Toyota and Honda in reliability.
resulting in a range of prices. For Enhanced quality control procedures and
example, new trucks range in base price superior manufacturing equipment have
from $16,000.00 for the Toyota Tacoma since mitigated the disparity.

Basis of Competition Business customers and individual Manufacturing industry (IBISWorld

continued consumers may define utility differently. A report 33611a). Although, a majority of
typical consumer would be interested in a industry operators produce both SUVs
vehicle’s towing capacity, seating and light trucks in addition to smaller
arrangements and cargo space. A typical passenger vehicles. Demand for
business owner would be more concerned compact vehicles is influenced by
with cargo or truck bed space. Compact fluctuation in the price of gasoline. As
trucks such as the Ford Ranger or Toyota fuel prices increase, consumers opt to
Tacoma are quickly disappearing in favor of purchase passenger vehicles that are
full-size trucks, which offer much greater more fuel efficient. However, as
space with minor penalties to fuel economy. industry operators continue to
implement more technology to
External competition improve fuel economy in SUVs and
Industry operators primarily compete light trucks, industry demand is
against the Car and Automobile expected to trend higher.
Barriers to Entry Manufacturing light trucks and sport-

utility vehicles (SUVs) is a capital- Barriers to Entry checklist
intensive enterprise requiring Competition High
Level & Trend
sophisticated manufacturing facilities Concentration High
arriers to Entry
B and robust supply chains. Production Life Cycle Stage Mature
in this industry are facilities use specialized equipment and Capital Intensity High
Highand S teady substantial floor space. In addition, Technology Change High
prospective automakers need proprietary Regulation & Policy Medium
or licensed vehicle designs and an Industry Assistance Medium
experienced workforce. Vehicles are
made from thousands of separate parts, SOURCE: WWW.IBISWORLD.COM
so sufficient volumes of reliable supplies

typically require long-term contracts with may require additional research and
several parts supply operators. development. These added research and
New entrants must comply with strict development expenses can be reduced by
regulatory standards for safety and forming a partnership with an existing
environmental concerns. These standards automaker as many foreign
are subject to periodic revisions, which manufacturers have done.
Industry Automotive manufacturing is a highly downturn, Fiat SpA, an Italian

Globalization globalized industry, and it is common automaker, bought a minority stake in
for companies to have joint ventures Chrysler and has since increased its
and minority interest stakes in foreign stake in the company to 100.0%. In
Level & Trend
companies. Mergers and acquisitions addition, Ford, despite holding steady
lobalization
G in this have been common for over a decade, economic ground, sold off brands and
industry is H
ighand though the pace quickened subsidiary companies to foreign buyers
the trend is S teady considerably given the collapse of including Chinese automakers.
American auto companies General The three domestic manufacturers
Motors (GM) and Chrysler. During the have large interests in foreign

Industry automakers. For example, Ford has a The three domestic manufacturers are
Globalization stake in Japan’s Mazda brand. GM had extensive users of globalized supply
formerly owned Swedish car chains. Virtually all vehicles manufactured
continued
manufacturer Saab before selling it in domestically have a significant number of
2010. GM still maintains ownership of components manufactured in Mexico,
German car company Opel along with Canada, Japan or China. These foreign
its subsidiary British brand Vauxhall. facilities are usually owned by
These subsidiaries are prime targets automakers themselves or affiliate
for asset sales in the wake of suppliers. As emerging markets grow, a
automaker bankruptcies and poor larger share of automotive activity will
sentiment among domestic consumers. take place abroad.
International trade is a Trade Globalization Going Global: SUV & Light Truck Manufacturing
major determinant of 2005-2017
an industry’s level of
200 Export Global 200 Export Global
globalization.
Exports offer growth
opportunities for firms. 150 150
Exports/Revenue
Exports/Revenue
However there are legal,

economic and political risks 100 100
associated with dealing in
foreign countries. SUV & Light Truck
50 50
Import competition can Manufacturing
bring a greater risk for 2017
companies as foreign 0 Local Import 0 Local 2005
Import
producers satisfy domestic 0 40 80 120 160 0 40 80 120 160
demand that local firms Imports/Domestic Demand Imports/Domestic Demand
would otherwise supply.

Major Companies
Ford Motor Company | General Motors Company
Fiat Chrysler Automobiles NV | Toyota Motor Corporation | Other Companies
Major players Toyota Motor Corporation 9.0%

(Market share) General Motors Company 12.4%
53.9%
Other
Fiat Chrysler Automobiles NV 9.9%
Ford Motor Company 14.8%
Player Performance Ford Motor Company is one of the portfolio in domestic markets rather than
largest auto manufacturers in the world. developing market-specific vehicles. Ford
The company is based in Dearborn, MI, has also introduced turbocharged and
Ford Motor a suburb of Detroit. Ford produces hybrid drivetrain offerings in the United
Company vehicles under the Ford and Lincoln States, such as the 2012 Ford Escape
Market share: 14.8% nameplates and operates in the same Hybrid SUV. Additionally, the
regions and market segments as its rival, introduction of the Ford Flex crossover-
Industry Brand Names
General Motors. Ford generated global utility vehicle (CUV) is emblematic of
Ford
revenue of $151.8 billion in 2016 (latest Ford’s new accelerated development
Lincoln
data available). initiative. The Ford Flex is a large CUV
Prior to the five-year period, Ford was that provides seating for seven and
the only domestic automaker to emerge maintains the fuel economy of a much
from 2009 without taking federal bailout smaller vehicle. In addition, Ford
funds or entering bankruptcy. Since then, recently introduced reduced-
Ford has focused on restructuring its displacement turbocharged engines
operations, aptly calling its restructuring under the EcoBoost brand for most of its
program One Ford. Under the plan, Ford vehicles. EcoBoost engines reduce fuel
has reduced domestic production consumption by about 15.0%, but
capacity, accelerated new vehicle maintain a similar performance to larger
development and avoided redundancies. engines. Moreover, in 2015, Ford
Ford has broken away from industry released an F-150, the nation’s bestselling
norms by using its global product vehicle, with an aluminum frame. Ford is
Ford Motor Company (US industry-relevant segments) - financial

performance*
Revenue Operating Income
Year ($ million) (% change) ($ million) (% change)
2012 17,863.7 N/C 848.3 N/C
2013 19,708.7 10.3 1,792.3 111.3
2014 19,164.3 -2.8 -79.0 N/C
2015 26,733.7 39.5 1,564.1 N/C
2016 28,313.7 5.9 1,884.7 20.5
2017 28,862.4 1.9 1,592.4 -15.5
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD

Major Companies
Player Performance using aluminum instead of steel to end, revenue from Ford’s US light truck
continued decrease the vehicle’s weight, and and SUV manufacturing segment is
therefore increase fuel economy. expected to increase at an annualized
rate of 10.1% to $28.9 billion over the
Financial performance five years to 2017, bolstered by strong
One Ford helped the company sales of its F-150 pickup. Additionally,
experience strong results. In the light in 2016, Ford announced it will launch
truck and SUV segment, Ford’s revenue four new SUVs in response to the
grew at double-digit rates in 2013 and growing popularity of SUVs and
2015. These strong postrecessionary crossovers. Asa result, industry-
years have helped alleviate the turmoil relevant revenue is expected to
from the economic downturn. To this continue rising at strong rates.
Player Performance General Motors Company (GM) is one of reduced labor costs, GM can now
the world’s largest automakers and the produce small vehicles and more fuel-
largest domestic manufacturer of light efficient trucks profitably. Furthermore,
General Motors trucks and SUVs. GM is one of the Big the development of new products has
Company Three domestic automakers based near become the top priority. For example,
Market share: 12.4% Detroit. GM operates manufacturing GM introduced the fuel-efficient
facilities and distribution networks in Chevrolet Sonic and the Buick Verano
Europe, Asia, Africa, Australia, North luxury car in the United States for model
GMC
America and South America. In 2016, GM year 2012, hoping to bring consumers
Chevrolet
generated $166.4 billion in revenue from its back to its small car and sedan segments,
Cadillac
global operations (latest data available). which are excluded from this industry.
Buick
Prior to the five-year period, GM filed Each future product line will embrace
for bankruptcy and experienced advanced technology for an enhanced
multibillion-dollar losses. The company’s overall driving experience for the
bankruptcy led to restructuring that consumer. In addition, the new GM has
eliminated plant assets and workforce. far fewer brands and fewer rebranded
With optimized production capacity and vehicles than before; Pontiac, Saturn,
General Motors Company (US industry-relevant segments) - financial

performance*
2012 18,664.7 N/C 752.2 N/C
2013 19,551.3 4.8 670.6 -10.8
2014 20,224.1 3.4 521.1 -22.3
2015 20,681.7 2.3 1,305.2 150.5
2016 23,420.8 13.2 1,304.6 0.0
2017 24,192.3 3.3 1,422.9 9.1
*Estimates
SOURCE: IBISWORLD

Major Companies
Player Performance Hummer and Saab have been at an annualized rate of 5.3% to $24.2
continued decommissioned or sold off. Trucks and billion. This manufacturing segment has
SUVs will primarily carry GMC or continued to improve, experiencing steady
Chevrolet branding with a few luxury growth throughout the five-year period.
models for Cadillac and Buick. GM expects further growth as the company
enhances research and development to
Financial performance broaden its product lines to satisfy
Over the five years to 2017, revenue from consumers. This strategy is expected to
GM’s US light truck and SUV help the light truck and SUV segment post
manufacturing segment is expected to grow revenue growth of 3.3% in 2017.
Player Performance Formerly Chrysler Group LLC, Fiat 1998 to 2007, Chrysler was a subsidiary of
Chrysler Automobiles NV (FCA) was DaimlerChrysler AG (now Daimler AG). In
formed following Fiat’s acquisition of the 2007, Daimler sold 80.0% of Chrysler to
Fiat Chrysler Auburn Hills, MI-based automaker. Cerberus Capital Management, a private
Automobiles NV Chrysler was the smallest of the domestic equity fund. Chrysler then filed for Chapter
Market share: 9.9% automakers, selling vehicles under the 11 bankruptcy in 2009, following a series of
Chrysler, Dodge, Ram and Jeep brands. federal cash infusions. The United Auto
However, the company is more Workers union and Fiat were the primary
Nissan
dependent on light trucks and SUVs than owners of Chrysler following the
Infiniti
Ford or General Motors, with the two bankruptcy. However, after purchasing the
product segments accounting for roughly US Treasury’s stake in the company in July
60.0% of sales in 2016 (latest data 2011, Fiat announced it would own 100.0%
available). Dodge and Jeep are geared of Chrysler after purchasing the remaining
toward light trucks and sport-utility stake owned by the Voluntary Employees’
vehicles (SUVs), while the Chrysler brand Beneficiary Association.
focuses on cars and minivans.
Chrysler Group had a rocky corporate Financial performance
history prior to the five-year period, rife Revenue generated from FCA’s industry-
with takeovers, mergers and bailouts. From relevant operations is expected to grow at
Fiat Chrysler Automobiles NV (US industry-relevant segments) - financial

performance*
2012 15,744.0 N/C 597.4 N/C
2013 16,835.1 6.9 525.4 -12.1
2014 18,640.0 10.7 564.1 7.4
2015 18,414.1 -1.2 437.1 -22.5
2016 18,950.0 2.9 598.1 36.9
2017 19,360.9 2.2 676.7 13.1
*Estimates

Major Companies
Player Performance an annualized rate of 4.2% to $19.4 revenue declined in 2015, due to lower
continued billion over the five years to 2017. FCA shipments and unfavorable currency
revamped several industry-relevant rates. Nevertheless, FCA has planned a
vehicles that have experienced success phaseout of the Chrysler 200 and Dodge
with consumers. For example, Jeep sales Dart to better meet market demand for
have surpassed 1.0 million units pickup trucks and SUVs. As a result,
worldwide, a new all-time sales record for industry-relevant revenue is expected to
the brand. However, industry-relevant continue trending upward.
Player Performance Toyota Motor Corporation (Toyota), recall 4.9 million vehicles due to
which has its North American improper pedal installation. The pedals
headquarters in Plano, TX, is one of the were installed in several Toyota and
Toyota Motor world’s largest automotive manufacturers. Lexus vehicles and caused some vehicles
Corporation Shortly after the Great East Japan to accelerate uncontrollably. Toyota has
Market share: 9.0% Earthquake in March 2011, Toyota a strong lineup of minivans, sport-utility
decided to curb production at its North vehicles (SUVs) and crossover-utility
American plants due to a massive parts vehicles (CUVs), but its trucks have
Toyota
shortage from suppliers who were also never sold exceptionally well in the
Lexus
disrupted by the earthquake. Prior to United States.
idling most of its North American Toyota was the first major automaker
production capacity, Toyota was the to sell hybrid vehicles on a mass-market
single-largest automaker in the country. basis with its Prius hatchback. The small
Toyota’s presence in North America has car, which can reach 50 miles per gallon,
accelerated exponentially since the 1980s has become an industry example for
when it began widespread offerings of its efficiency. The Toyota Highlander and
Camry and Corolla compact cars. Over the Lexus RX 450h SUVs now offer hybrid
years, Toyota has developed a reputation drive train options. Future minivan and
for frugality, efficiency and reliability. truck platforms will likely receive the
However, this image was tarnished in technology as well. Toyota’s innovation
2010 when the company was forced to puts it ahead of other automakers, which
Toyota Motor Corporation (US industry-relevant segments) - financial

performance*
Year** ($ million) (% change) ($ million) (% change)
2012-13 13,414.0 N/C 620.6 N/C
2013-14 14,404.1 7.4 1,174.3 89.2
2014-15 15,042.3 4.4 1,395.7 18.9
2015-16 16,108.5 7.1 1,518.6 8.8
2016-17 16,456.7 2.2 1,110.8 -26.9
2017-18 17,576.6 6.8 993.3 -10.6
*Estimates; **Year-end March


Major Companies
Player Performance have been forced to refine their hybrid industry relevant, the company is also
continued technologies in response. striving to capture a greater share of
industry sales as SUVs and light trucks
Financial performance typically yield higher returns. Moreover,
Over the five years to fiscal 2018, Toyota is anticipated to emphasize fuel
Toyota’s industry-relevant revenue is economy in its industry-relevant
expected to increase at an annualized vehicles, which will likely lift sales
rate of 5.6% to $17.6 billion, partly due further. For example, the RAV4 EV is
to strong demand for RAV4’s, one of the powered by a lithium ion battery pack,
best-selling vehicles. Although Toyota is which increases the vehicle’s fuel
increasingly focusing on newer small efficiency and will likely bolster sales for
passenger vehicles, which are not the company.
Other Companies Honda Motor Company Ltd. Nissan Motor Co. Ltd
Estimated market share: 4.8% Estimated market share: 3.9%
Honda Motor Company Ltd. conducts its Nissan Motor Company Ltd. is one of
North American operations from Los Japan’s largest automakers and was
Angeles, and sells vehicles under the founded in 1933. The company first came to
Honda and Acura brand names. Most the United States in 1958 and established
Acura vehicles are luxury models based Nissan Motor Corporation USA in 1960. In
on Honda cars. Honda’s practical and 1998, Nissan North America Inc., which
affordable small cars have earned it a encompassed all of the company’s various
loyal US following. Honda’s minivans, activities, including design, development,
crossover-utility vehicles and trucks manufacturing and marketing, merged with
perform well in a very crowded market, Nissan Motor Corporation USA to form
but trucks and larger sports-utility Nissan North America Inc. Nissan operates
vehicles account for slightly less than in this industry through the manufacturing
50.0% of Honda’s overall sales. Like its of sports-utility vehicles (SUVs), crossover-
rival, Toyota, Honda focuses on utility vehicles (CUVs) and trucks under the
technology development and affordable Nissan and Infiniti brands. Additionally, the
passenger cars. Honda is known for company, which has its North American
innovative vehicle platforms and designs operations based in Franklin, TN, is the
that emphasize simplicity and frugality. smallest of the three major Japanese
It developed the first commercially manufacturers, yet is increasingly expanding
available hybrid car, the Honda Insight, operations in the United States. Although
in 2000. The three-cylinder vehicle was trucks manufactured by Nissan are not
not intended for mass-market appeal, intended to overtake trucks manufactured
unlike the now-ubiquitous Toyota Prius. by the Big Three, the company offers
Honda continues to push boundaries vehicles in this product segment to expand
with its vehicle innovations and its overall vehicle lineup. Moreover, the
expanded product lines. In 2012, Honda Rogue, a compact sports utility vehicle
introduced a new lineup of gasoline which was first introduced in 2008, has
engines and transmissions to augment its grown in popularity, and has been one of
lineup of medium-size and large hybrid Nissan’s best-selling vehicles throughout the
car models. In fiscal 2018, the company is past five years. As a result, Nissan’s
expected to generate roughly $9.4 billion industry-relevant segment is expected to
in industry-relevant revenue. generate $7.7 billion in fiscal 2017.

Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity Assembly plants are highly automated

production lines fitted with high-tech Capital intensity
Capital units per labor unit
machinery and equipment. Operators in this
Level
industry must spend large sums on their 1.0
The levelof capital plants and equipment, with periodic
intensity is H
igh reinvestment in the case of equipment 0.8
failure. For every dollar spent on labor, the 0.6

average industry operator will invest roughly
$0.55 in capital equipment. Throughout the 0.4
entire automotive manufacturing sector, 0.2

investment in capital must be high, as
operators must spend heavily to keep up 0.0
Economy Manufacturing SUV & Light
with technological advancements that help Truck
Manufacturing
the production process. Advancements in Dotted line shows a high level of capital intensity
machine efficiency and automation along SOURCE: WWW.IBISWORLD.COM
with falling labor costs make the industry

highly capital intensive.
Tools of the Trade: Growth Strategies for Success
New Age Economy Investment Economy

Recreation, Personal Services, Information, Communications,
Health and Education. Firms Mining, Finance and Real
benefit from personal wealth so Estate. To increase revenue
stable macroeconomic conditions firms need superior debt
are imperative. Brand awareness management, a stable
and niche labor skills are key to macroeconomic environment
product differentiation. and a sound investment plan.
Capital Intensive
Labor Intensive
SUV & Light Truck Manufacturing
New Car Dealers Car & Automobile Manufacturing

Automobile Wholesaling Truck & Bus Manufacturing
Traditional Service Economy Old Economy
Iron & Steel Manufacturing
Wholesale and Retail. Reliant Agriculture and Manufacturing.
on labor rather than capital to Traded goods can be produced
sell goods. Functions cannot using cheap labor abroad.
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialize
increase revenue growth. in niche, high-value products.
Change in Share of the Economy SOURCE: WWW.IBISWORLD.COM

Technology & Systems Modern vehicle design processes make assembly line be resupplied
heavy use of computer-assisted design independently during production.
Level software, enabling an initial concept to Automakers are heavily involved in
be developed in days rather than the research and development of vehicle
The level
of months. The latest vehicle assembly technologies, including electric and
Technology plants are automated with most labor fuel-cell vehicles. Spending on research
Change is H
igh performed by specially designed is an important component of an
robotic arms. automaker’s long-term business
GM has started operating three of its strategy. GM and other automakers are
assembly plants on a 24-hour basis. developing several technologies that
Traditionally, these factories operate could change the industry if they become
with two eight-hour production shifts commercially viable. Cars and trucks are
and one eight-hour resupply shift. GM host to an ever-increasing array of
plans to adjust its production electronic gadgets typically designed
processes to let single stages of the with a supply company.
Revenue Volatility Industry revenue is largely driven by vehicles, which will stimulate demand for
consumer demand preferences. As gas SUVs and light trucks. Moreover, as the
prices fluctuate, so does the sentiment of overall economy continues to recover,
Level
the consumer. Over the five years to 2017, consumers are more likely to purchase
The level of gas prices are expected to fall from big-ticket items, such as a new vehicle,
Volatility is M
edium historically high levels at an annualized which bolsters industry sales. Per capita
rate of 13.1%, which will likely have a disposable income is expected to increase
huge effect on the purchasing power of 1.4% from 2012 to 2017. As a result of
the consumer, and therefore, industry these trends, the industry has exhibited
revenue. As gas prices decline, consumers moderate revenue volatility during the
will be more apt to purchase larger five-year period.
A higher level of revenue Volatility vs Growth

volatility implies greater
industry risk. Volatility can 1000 Hazardous Rollercoaster
negatively affect long-term
Revenue volatility* (%)
strategic decisions, such as 100

the time frame for capital
investment.
10
When a firm makes poor SUV & Light Truck
investment decisions it Manufacturing
may face underutilized 1
capacity if demand
suddenly falls, or capacity 0.1 Stagnant Blue Chip
constraints if it rises –30 –10 10 30 50 70
quickly. Five-year annualized revenue growth (%)
* Axis is in logarithmic scale

Regulation & Policy Automakers are required to comply with Emissions

government regulations regarding The Environmental Protection Agency
safety, fuel consumption and pollution (EPA) sets regulatory standards for vehicle
Level & Trend control. Federal law requires that a emissions of nitric oxide, particulate matter
he level of
T manufacturer recall a vehicle if it finds a and carbon monoxide. A 2007 US Supreme
Regulation is defect that “poses an unreasonable risk Court ruling granted the EPA authority to
Mediumand the to safety.” The National Highway Traffic regulate greenhouse gases, principally
and Safety Administration (NHTSA) carbon dioxide. The EPA is expected to
trend is I ncreasing
compiles complaints from consumers unveil such regulations in 2010. Regulatory
and can prod a manufacturer to recall a schemes are complicated by activity from
vehicle; this is a rare occurrence today, California’s Air Resources Board (CARB),
as automakers are keen to preemptively which frequently issues regulations even
recall products. stricter than those from the EPA. This
Since 2004, the NHTSA has ranked additional set of standards can make it
vehicles for risk of rollovers, using a prohibitively expensive for automakers to
percent-risk rating system. Light trucks sell noncompliant vehicles in California.
and SUVs with a high center of gravity
are the most prone to rollover. Since Updated fuel efficiency standards
2007, automakers have advertised The Corporate Average Fuel Economy
vehicle safety ratings with stickers on (CAFE) regulations for United States
new vehicles. All vehicle window stickers automotive manufacturers were first set by
display the star ratings awarded by the Congress in 1975. These regulations were
NHTSA for frontal, side and rollover created to help improve the average fuel
crash-safety test ratings. economy of both cars and light trucks. In
July 2011, President Obama updated the
Chicken tax CAFE regulations through an agreement
A 1963 law imposes a 25.0% tax on with thirteen automakers that will increase
imported light trucks. The law was the average fuel economy of all cars and
originally intended as retaliation to a light trucks to 54.5 miles per gallon (mpg)
European tax on American chicken by model year 2025. Companies that joined
imports, though the law has not been the President on this proposal include all
repealed since. The North American Free five major players of the light truck and
Trade Agreement created exemptions for SUV manufacturing industry Ford, General
Canada and Mexico, but complete trucks Motors, Chrysler, Toyota and Honda.
manufactured elsewhere are still subject However, in March 2017, the Trump
to the tax. Manufacturers circumvent the Administration announced it would reopen
tax by importing vehicles in nearly a review of the light-duty vehicle regulations
complete kits, known as complete in response to many concerns from auto
knockdowns. These kits are shipped to manufacturers. This review could reverse or
US assembly facilities where workers lessen the current standards for automakers,
reassemble the vehicle. which will most likely shake up the industry.

Industry Assistance Light-truck and sports-utility vehicle (SUV) branch’s automotive task force. Despite
manufacturers are frequent beneficiaries of the infusion of government funds, GM
government assistance that covers the and Chrysler each entered chapter 11
Level & Trend entire automotive manufacturing industry. bankruptcy in the first half of 2009, on
he level of Industry
T Automakers have a powerful lobbying June 1 and April 30, respectively.
Assistance is presence, which often results in policies Additional details are discussed in the
Mediumand the that favor the industry. In recent years, Major Companies section of this report.
these policies have centered on research
trend is I ncreasing
subsidies and the highly publicized bailout A new direction
of General Motors (GM) and Chrysler. In More recently, government assistance
addition to these high-profile cases, programs have targeted indirect help by
government agencies at all levels are influencing downstream demand trends.
required to purchase vehicles produced by In the midst of declining revenue and
a domestic automaker. sales, the government came to the aid of
industry operators by implementing the
Auto bailout CARS program, also known as Cash for
In September 2008, the federal Clunkers. Started in July 2009 and
government approved a $25.0 billion ending in September 2011, CARS has
loan to US automakers for investment in provided a much-needed boost for major
alternatively fueled vehicle production domestic manufacturers. The program
including biofuels, electric drives and fuel enabled consumers to trade in an old,
cells. The majority of this investment will less fuel-efficient vehicle for a new one
be spent on manufacturing equipment with better fuel economy.
and test vehicles for electric drivetrains According to the CARS website, 85.0%
on small vehicles. Fully electric light of trade-ins were trucks and 59.0% of
trucks will require additional research new vehicles purchased were cars.
and development. Though this may seem like a disservice to
US automakers began lobbying for light truck and SUV manufacturers, this
$25.0 billion bailout package in boost in revenue and sales helped
November 2008. The initial request was stabilize the highly concentrated
turned down. In December 2008, GM automotive industry overall. Major
and Chrysler returned with a more companies have transferred this revenue
detailed proposal to request $34.0 to research and development on wildly
billion, claiming impending bankruptcy if successful new CUV models and hybrid
demands were not met. Congress drivetrains for SUVs and trucks that
approved their request while giving continue to remain popular among
oversight of the package to the executive consumers in 2016.

Key Statistics
Industry Data Industry World price
Revenue Value Added Establish- Exports Imports Wages Domestic of crude oil
($m) ($m) ments Enterprises Employment ($m) ($m) ($m) Demand ($/barrel)
2008 123,329.4 13,842.1 91 67 81,059 31,381.8 89,371.3 6,195.7 181,318.9 97.0
2009 91,350.5 7,346.8 86 64 56,843 15,557.2 50,171.0 4,332.2 125,964.3 61.8
2010 126,050.9 7,378.5 76 58 52,597 24,105.1 79,976.0 4,353.3 181,921.8 79.6
2011 133,865.3 10,054.7 72 57 51,607 31,034.3 89,750.7 4,164.6 192,581.7 104.0
2012 131,912.3 8,286.6 78 63 56,524 31,658.8 95,910.8 4,856.9 196,164.3 105.0
2013 148,417.3 11,769.4 77 63 62,708 33,370.0 98,928.5 5,239.1 213,975.8 104.1
2014 166,300.5 17,694.8 76 62 67,119 34,042.9 103,215.9 5,721.2 235,473.5 96.2
2015 185,077.9 19,532.2 72 59 76,577 34,741.8 113,086.5 6,641.5 263,422.6 50.8
2016 189,447.8 20,566.9 73 60 83,161 34,613.7 121,116.4 6,790.8 275,950.5 43.3
2017 195,475.4 21,295.7 72 59 93,034 32,174.5 122,675.6 7,730.2 285,976.5 52.0
2018 200,238.4 22,454.6 72 58 94,320 30,234.7 127,752.9 7,872.2 297,756.6 54.3
2019 206,228.6 23,652.3 72 58 95,851 31,494.2 132,539.8 8,045.1 307,274.2 55.9
2020 211,494.9 24,017.3 72 59 97,735 31,724.8 134,240.8 8,233.2 314,010.9 57.4
2021 216,500.9 24,667.7 72 59 99,314 32,404.5 135,115.5 8,398.1 319,211.9 59.0
2022 217,175.7 24,727.7 71 58 99,957 32,449.4 139,237.4 8,449.4 323,963.7 60.5
Sector Rank 4/438 9/437 328/438 330/438 40/438 7/402 2/402 20/438 2/402 N/A
Economy Rank 54/1891 161/1584 1693/1891 1672/1891 470/1891 9/526 5/526 258/1891 5/526 N/A
Annual Change Industry Establish- Domestic World price

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand of crude oil
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2009 -25.9 -46.9 -5.5 -4.5 -29.9 -50.4 -43.9 -30.1 -30.5 -36.3
2010 38.0 0.4 -11.6 -9.4 -7.5 54.9 59.4 0.5 44.4 28.9
2011 6.2 36.3 -5.3 -1.7 -1.9 28.7 12.2 -4.3 5.9 30.6
2012 -1.5 -17.6 8.3 10.5 9.5 2.0 6.9 16.6 1.9 1.0
2013 12.5 42.0 -1.3 0.0 10.9 5.4 3.1 7.9 9.1 -0.9
2014 12.0 50.3 -1.3 -1.6 7.0 2.0 4.3 9.2 10.0 -7.5
2015 11.3 10.4 -5.3 -4.8 14.1 2.1 9.6 16.1 11.9 -47.2
2016 2.4 5.3 1.4 1.7 8.6 -0.4 7.1 2.2 4.8 -14.8
2017 3.2 3.5 -1.4 -1.7 11.9 -7.0 1.3 13.8 3.6 20.3
2018 2.4 5.4 0.0 -1.7 1.4 -6.0 4.1 1.8 4.1 4.4
2019 3.0 5.3 0.0 0.0 1.6 4.2 3.7 2.2 3.2 3.0
2020 2.6 1.5 0.0 1.7 2.0 0.7 1.3 2.3 2.2 2.6
2021 2.4 2.7 0.0 0.0 1.6 2.1 0.7 2.0 1.7 2.7
2022 0.3 0.2 -1.4 -1.7 0.6 0.1 3.1 0.6 1.5 2.5
Sector Rank 118/438 115/437 368/438 379/438 7/438 366/402 291/402 8/438 126/402 N/A
Economy Rank 595/1891 485/1584 1674/1891 1702/1891 34/1891 486/526 379/526 33/1891 169/526 N/A
Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2008 11.22 49.29 25.45 1,521.48 5.02 890.76 76,434.45 0.09
2009 8.04 39.83 17.03 1,607.07 4.74 660.97 76,213.43 0.05
2010 5.85 43.96 19.12 2,396.54 3.45 692.07 82,767.08 0.05
2011 7.51 46.60 23.18 2,593.94 3.11 716.76 80,698.35 0.07
2012 6.28 48.89 24.00 2,333.74 3.68 724.67 85,926.33 0.05
2013 7.93 46.23 22.48 2,366.80 3.53 814.39 83,547.55 0.08
2014 10.64 43.83 20.47 2,477.70 3.44 883.14 85,239.65 0.11
2015 10.55 42.93 18.77 2,416.89 3.59 1,063.57 86,729.70 0.12
2016 10.86 43.89 18.27 2,278.08 3.58 1,139.19 81,658.47 0.12
2017 10.89 42.90 16.46 2,101.12 3.95 1,292.14 83,090.05 0.13
2018 11.21 42.91 15.10 2,122.97 3.93 1,310.00 83,462.68 0.13
2019 11.47 43.13 15.27 2,151.55 3.90 1,331.26 83,933.40 0.13
2020 11.36 42.75 15.00 2,163.96 3.89 1,357.43 84,240.04 0.13
2021 11.39 42.33 14.97 2,179.96 3.88 1,379.36 84,561.09 0.13
2022 11.39 42.98 14.94 2,172.69 3.89 1,407.85 84,530.35 0.13
Sector Rank 426/437 91/402 183/402 6/438 429/438 2/438 43/438 9/437
Economy Rank 1519/1584 116/526 247/526 41/1891 1840/1891 3/1891 289/1891 161/1584
Figures are in inflation-adjusted 2017 dollars. Rank refers to 2017 data. SOURCE: WWW.IBISWORLD.COM

Industry Financial Ratios

Apr 2015 - Mar 2016 by company revenue
Apr 2012 - Apr 2013 - Apr 2014 - Apr 2015 - Small Medium Large
Mar 2013 Mar 2014 Mar 2015 Mar 2016 (<$10m) ($10-50m) (>$50m)
Liquidity Ratios
Current Ratio 1.4 1.4 1.4 1.5 n/a 1.7 1.4
Quick Ratio 0.6 0.7 0.6 0.6 n/a 0.5 0.7
Sales / Receivables (Trade Receivables
Turnover) 10.0 11.3 10.4 10.6 n/a 11.2 11.0
Days’ Receivables 36.5 32.3 35.1 34.4 n/a 32.6 33.2
Cost of Sales / Inventory (Inventory Turnover) 3.6 8.0 4.8 4.4 n/a 6.2 5.3
Days’ Inventory 101.4 45.6 76.0 83.0 n/a 58.9 68.9
Cost of Sales / Payables (Payables Turnover) 13.9 12.6 11.0 13.8 n/a 12.4 17.2
Days’ Payables 26.3 29.0 33.2 26.4 n/a 29.4 21.2
Sales / Working Capital 9.6 10.6 10.1 15.4 n/a 11.1 15.4
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 3.5 4.8 7.1 16.5 n/a 32.9 7.4
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt 5.1 7.4 2.0 n/a n/a n/a n/a
Leverage Ratios
Fixed Assets / Net Worth 0.4 0.5 0.4 0.3 n/a 0.2 0.3
Debt / Net Worth 2.4 2.3 2.3 1.8 n/a 1.2 3.0
Tangible Net Worth 33.0 21.4 27.0 31.9 n/a 45.2 29.2
Operating Ratios
Profit before Taxes / Net Worth, % 14.2 22.9 36.0 38.0 n/a 46.7 29.3
Profit before Taxes / Total Assets, % 3.9 7.8 8.2 9.9 n/a 23.4 11.4
Sales / Net Fixed Assets 19.6 14.4 15.5 23.0 n/a 40.1 36.5
Sales / Total Assets (Asset Turnover) 1.9 2.0 2.1 2.2 n/a 2.3 2.4
Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 17.1 20.7 19.4 17.6 n/a n/a n/a
Cash after Operations 2.8 8.1 4.3 5.9 n/a n/a n/a
Net Cash after Operations 2.5 6.7 4.5 5.0 n/a n/a n/a
Cash after Debt Amortization -1.2 2.9 1.3 1.4 n/a n/a n/a
Debt Service P&I Coverage 1.0 3.0 2.0 5.2 n/a n/a n/a
Interest Coverage (Operating Cash) 2.0 10.1 3.7 13.2 n/a n/a n/a
Assets, %
Cash & Equivalents 8.3 11.7 10.3 7.4 n/a 8.3 6.3
Trade Receivables (net) 21.9 23.9 21.3 22.1 n/a 15.6 27.4
Inventory 38.6 28.5 35.2 40.2 n/a 38.7 42.2
All Other Current Assets 4.5 3.1 4.9 2.0 n/a 0.3 3.6
Total Current Assets 73.3 67.2 71.7 71.6 n/a 62.8 79.6
Fixed Assets (net) 18.5 19.8 19.4 17.4 n/a 25.5 13.3
Intangibles (net) 3.5 4.1 5.6 4.0 n/a 2.3 4.1
All Other Non-Current Assets 4.8 8.9 3.3 7.0 n/a 9.4 3.0
Total Assets 100.0 100.0 100.0 100.0 n/a 100.0 100.0
Total Assets ($m) 2,518.5 2,075.8 1,499.9 1,118.7 20.1 111.0 987.6
Liabilities, %
Notes Payable-Short Term 10.9 11.5 13.0 17.8 n/a 10.9 15.9
Current Maturities L/T/D 5.7 3.6 2.9 1.3 n/a 1.2 1.7
Trade Payables 17.2 16.3 18.3 15.7 n/a 16.5 13.9
Income Taxes Payable 0.3 0.1 0.1 n/a n/a n/a n/a
All Other Current Liabilities 18.2 18.9 17.7 18.5 n/a 10.3 22.5
Total Current Liabilities 52.2 50.4 51.9 53.3 n/a 38.9 54.1
Long Term Debt 8.0 10.0 10.9 8.3 n/a 13.3 7.7
Deferred Taxes 0.3 0.3 0.1 n/a n/a n/a n/a
All Other Non-Current Liabilities 2.9 13.7 4.4 2.5 n/a 0.3 4.8
Net Worth 36.5 25.5 32.6 35.9 n/a 47.5 33.3
Total Liabilities & Net Worth ($m) 2,518.5 2,075.8 1,499.9 1,118.7 20.1 111.0 987.6
Maximum Number of Statements Used 45 44 39 33 7 10 16
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more
than 260,000 statements of member financial institutions’ borrowers and prospects.
Note: For a full description of the ratios refer to the Key Statistics chapter online.

Jargon & Glossary
Industry Jargon CORPORATE AVERAGE FUEL ECONOMY (CAFE)A HYBRID VEHICLEA vehicle that uses two different
regulation intended to improve the average fuel power sources to run, in most cases referring to an
economy of cars and light trucks. electric battery in conjunction with a gasoline engine.
CROSSOVER-UTILITY VEHICLE (CUV)A mid-sized MILES PER GALLON (MPG)A measure used to indicate
vehicle that combines features of a car with an SUV. They fuel-efficiency.
are generally smaller and more fuel-efficient than SUVs. SPORT-UTILITY VEHICLE (SUV)A mid-sized vehicle
FUEL CELLAn energy source that operates like a similar to a station wagon, but built on a light-truck
battery but does not require recharging; oxygen passes chassis.
over one electrode and hydrogen over a second,
generating electricity, water and heat.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY CONCENTRATIONAn indicator of the
new companies struggle to enter an industry, while low dominance of the top four players in an industry.
barriers mean it is easy for new companies to enter an Concentration is considered high if the top players
industry. account for more than 70% of industry revenue.
CAPITAL INTENSITYCompares the amount of money Medium is 40% to 70% of industry revenue. Low is less
spent on capital (plant, machinery and equipment) with than 40%.
that spent on labor. IBISWorld uses the ratio of INDUSTRY REVENUEThe total sales of industry goods
depreciation to wages as a proxy for capital intensity. and services (exclusive of excise and sales tax); subsidies
High capital intensity is more than $0.333 of capital to on production; all other operating income from outside
$1 of labor; medium is $0.125 to $0.333 of capital to $1 the firm (such as commission income, repair and service
of labor; low is less than $0.125 of capital for every $1 of income, and rent, leasing and hiring income); and
labor. capital work done by rental or lease. Receipts from
CONSTANT PRICESThe dollar figures in the Key interest royalties, dividends and the sale of fixed
Statistics table, including forecasts, are adjusted for tangible assets are excluded.
inflation using the current year (i.e. year published) as INDUSTRY VALUE ADDED (IVA)The market value of
the base year. This removes the impact of changes in goods and services produced by the industry minus the
the purchasing power of the dollar, leaving only the cost of goods and services used in production. IVA is
“real” growth or decline in industry metrics. The inflation also described as the industry’s contribution to GDP, or
adjustments in IBISWorld’s reports are made using the profit plus wages and depreciation.
US Bureau of Economic Analysis’ implicit GDP price INTERNATIONAL TRADEThe level of international
deflator. trade is determined by ratios of exports to revenue and
DOMESTIC DEMANDSpending on industry goods and imports to domestic demand. For exports/revenue: low is
services within the United States, regardless of their less than 5%, medium is 5% to 20%, and high is more
country of origin. It is derived by adding imports to than 20%. Imports/domestic demand: low is less than
industry revenue, and then subtracting exports. 5%, medium is 5% to 35%, and high is more than
EMPLOYMENTThe number of permanent, part-time, 35%.
temporary and seasonal employees, working proprietors, LIFE CYCLEAll industries go through periods of growth,
partners, managers and executives within the industry. maturity and decline. IBISWorld determines an
ENTERPRISEA division that is separately managed and industry’s life cycle by considering its growth rate
keeps management accounts. Each enterprise consists (measured by IVA) compared with GDP; the growth rate
of one or more establishments that are under common of the number of establishments; the amount of change
ownership or control. the industry’s products are undergoing; the rate of
technological change; and the level of customer
ESTABLISHMENTThe smallest type of accounting unit
acceptance of industry products and services.
within an enterprise, an establishment is a single
physical location where business is conducted or where NONEMPLOYING ESTABLISHMENTBusinesses with
services or industrial operations are performed. Multiple no paid employment or payroll, also known as
establishments under common control make up an nonemployers. These are mostly set up by self-employed
enterprise. individuals.
EXPORTSTotal value of industry goods and services sold PROFITIBISWorld uses earnings before interest and tax
by US companies to customers abroad. (EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
IMPORTSTotal value of industry goods and services
interest and tax.
brought in from foreign countries to be sold in the
United States.

Jargon & Glossary
IBISWorld Glossary VOLATILITYThe level of volatility is determined by WAGESThe gross total wages and salaries of all
averaging the absolute change in revenue in each of the employees in the industry. The cost of benefits is also
continued past five years. Volatility levels: very high is more than included in this figure.
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.

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WWW.IBISWORLD.

COM SUV & Light Truck Manufacturing in the USOctober 2017 1

Turbo charge: Stricter fuel efficiency standards

IBISWorld Industry Report 33611b

2 About this Industry 16 International Trade 31 Revenue Volatility

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

About this Industry

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries 33611a Car & Automobile Manufacturing in the US

33612 Truck & Bus Manufacturing in the US

33621 Truck, Trailer & Motor Home Manufacturing in the US

33699b Tank & Armored Vehicle Manufacturing in the US

Additional Resources For additional information on this industry

Provided to: Purdue University (2128197249) | 09 February 2018

Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

Corporation Products and services segmentation (2017)

Industry Structure Life Cycle Stage Mature Regulation Level Medium

Provided to: Purdue University (2128197249) | 09 February 2018

Provided to: Purdue University (2128197249) | 09 February 2018

Per capita disposable income Trade-weighted index

Provided to: Purdue University (2128197249) | 09 February 2018

Current Over the five years to 2017, revenue for

rates. Moreover, industry revenue is

Provided to: Purdue University (2128197249) | 09 February 2018

The customer is Despite a resurgence in demand for SUVs

Provided to: Purdue University (2128197249) | 09 February 2018

Industry Improving consumer sentiment and per

Financial stability Industry operators will look to address

Provided to: Purdue University (2128197249) | 09 February 2018

Fuel economy Corporate Average Fuel Economy (CAFE)

Provided to: Purdue University (2128197249) | 09 February 2018

20 Maturity Quality Growth

Key Features of a Mature Industry

New Car Dealers Automobile Wholesaling

Iron & Steel Manufacturing

Provided to: Purdue University (2128197249) | 09 February 2018

Provided to: Purdue University (2128197249) | 09 February 2018

Products & Markets

Supply Chain KEY BUYING INDUSTRIES

KEY SELLING INDUSTRIES

Provided to: Purdue University (2128197249) | 09 February 2018

Products & Markets

Products & Services Products and services segmentation (2017)

Total $195.5bn SOURCE: WWW.IBISWORLD.COM

are expected to make up 17.3% of trucks still belong to Japanese

Provided to: Purdue University (2128197249) | 09 February 2018

Products & Markets

Provided to: Purdue University (2128197249) | 09 February 2018

Products & Markets

Major Markets Major market segmentation (2017)

Total $195.5bn SOURCE: WWW.IBISWORLD.COM

Automakers use a variety of distribution Automobile dealerships

Provided to: Purdue University (2128197249) | 09 February 2018

Products & Markets

International Trade Over the five years to 2017, exports are

Level & Trend 0.3% to $32.2 billion. The four largest

Mediumand S teady barriers between the United States, Mexico,

are often rebranded as Opel vehicles. Over

Exports To... Imports From...

Year: 2017 Total $32.2bn Total $122.7bn

Provided to: Purdue University (2128197249) | 09 February 2018

Products & Markets

COM SUV & Light Truck Manufacturing in the USOctober 2017 1