Automobile Steering and Suspension Manufacturing

Over the five years through 2020, the Automobile Steering and Suspension Manufacturing industry witnessed contraction. COVID-19 spread in 2020 wiped off benefits from previous favorable trends, such as increasing automotive manufacturing in response to increasing consumer demand owing to growing disposable income levels.

Additionally, operators profited from shifting customer tastes, as manufacturers expanded their product choices in response to increased public demand for fuel efficiency and safety. Recent low fuel costs have bolstered new vehicle sales, especially of trucks and SUVs. However, new auto sales in the United States gradually fell through 2019, ultimately collapsing in 2020 due to the coronavirus’s uncertainties.

These concerns contributed to a 24.3 percent decline in income in 2020 alone. As a result of this single year of reduction, industry revenue is expected to shrink by 4.8 percent annually to $12.6 billion.
However, development in the automobile components aftermarket has aided in mitigating a more significant fall in industry revenue.

Despite decreased new vehicle sales, the average age of the US vehicle fleet and total kilometers traveled have climbed over the last decade. Increased vehicle wear has increased demand for aftermarket replacement components. Nonetheless, declining revenue and shifting input costs have harmed the industry’s profitability during the time, most notably in 2020.

The sector is expected to increase steadily during the next five years, through 2025. New vehicle sales are expected to rebound from recent lows, boosting demand for industry auto components. Positive macroeconomic trends such as rising consumer spending and low borrowing rates are projected to continue, assisting in the future purchase of more automobiles.

This should contribute to the continued growth of demand from automakers. Additionally, technical advancements are projected to boost the business to a certain degree. As the industry moves toward electric and wired power steering as a result of the increased need for fuel economy and increased dependence on electrical components, the value of parts will grow.

As manufacturers invest in electric and autonomous cars, these power steering solutions, as opposed to hydraulic systems, will be vital. Additionally, increasing exports should provide operators with a new cash source. Over the five years to 2025, revenue is expected to grow at an annualized rate of 4.3 percent to $15.6 billion.

Domestic motor vehicle manufacturing sector expansion, aided by overall auto production growth, generated revenue for the Automobile Steering and Suspension Manufacturing industry during the five years to 2020. Additionally, sales to the automobile aftermarket, spurred by an aging US fleet, increased demand for industry goods. However, the spread of the coronavirus across the United States and the rest of the globe in 2020 has resulted in dramatic drops in consumer mood and widespread economic instability, resulting in a fall in vehicle sales and a contraction in overall demand for industrial products. As a consequence, industry revenue is likely to shrink at an annualized rate of 4.8 percent to $12.6 billion over the five years to 2020, with a projected decrease of 24.3 percent in 2020 alone.

The industry’s downturn during the next five years through 2020 is due to its dependence on local automakers. As automotive manufacturing increases, demand for steering and suspension components increases proportionately. As a result, industry operators gained during the majority of the present period as vehicle manufacturing increased in response to favorable macroeconomic fundamentals. Automobile manufacturers increased their investment in new cars in response to better job levels, better disposable incomes, and low financing rates. Additionally, automakers expanded their product choices to satisfy growing customer demand for more fuel-efficient automobiles, which prompted customers to make further new car purchases. However, with the emergence of coronavirus in 2020 and subsequent losses in new vehicle sales, consumer spending, and consumer confidence, the sector has seen dramatic drops in demand, temporary production shutdowns, and a projected severe loss in revenue.

While recent gasoline price drops have boosted demand for trucks and SUVs, buyers remain concerned about fuel efficiency. Additionally, stringent laws governing the average fleet efficiency of vehicles have compelled manufacturers to invest in more efficient components. As a consequence of increasing sales of modern steering system technology, the sector has profited from fuel efficiency trends. Industry operators have increasingly concentrated their efforts on delivering electric power steering systems, which have increased their market share. According to studies conducted by Robert Bosch GmbH, electric systems lower CO2 emissions by 10% and the energy used by the steering system by 90%.

Industry expansion has also been aided by aftermarket sales. The average age of the fleet is expected to grow significantly to 11.9 years in 2020, up from 11.5 years in 2015. As price-conscious individuals continued to fix their existing cars to save money, the average age of autos climbed steadily. The aging fleet of automobiles on US highways has increased demand for replacement parts, particularly steering and suspension components. While the aftermarket is expected to represent a little part of industry income in comparison to sales to automobile original equipment manufacturers (OEMs), it provides a much-needed outlet for industry goods.

Volatility at different pricing points has created difficulties for steering and suspension manufacturers in the five years through 2020. The global steel price, which is an aggregate gauge of the pricing of major raw steel products, is predicted to climb at an annualized rate of 3.9 percent throughout the period, showing substantial year-to-year volatility. Similarly, the global crude oil price started the era at an all-time high before plunging by double digits in 2015 and 2016. Then, when the supply glut eased, oil prices increased dramatically in 2017. In 2020, the global price of oil is expected to plummet by further 38.0 percent as a result of coronavirus-related production shutdowns and demand declines. Volatility in input prices makes it difficult for businesses to maximize their production levels and pricing strategies. Volatility in inputs has been a strain on the business as a whole, since operators have difficulties forecasting future costs. Overall, industry profit, defined as profits before interest and taxes, has decreased to 3.6 percent over the last five years, owing mostly to price volatility and profit being squeezed by car OEM needs. Due to the downstream automakers’ concentration and scale, they have substantial negotiating leverage when it comes to car components supply prices.

These business demands, along with government laws, customer worries about the environment, and technological advancements in the automobile sector, have facilitated increasing efficiency among the industry’s most concentrated operators. To meet demand from manufacturers, companies have boosted investment in innovative technologies, including electric power steering and by-wire steering. This has resulted in a greater concentration of power in the hands of huge, multinational firms with the financial resources necessary to deliver these new technologies. Over the last five years, several big auto parts suppliers that operate in many sectors have boosted their acquisition activity by focusing on smaller businesses. This is indicative of consolidation at the industry’s highest end. As a result of this trend toward efficiency and consolidation, the number of industrial establishments is expected to decline by 1.1 percent to 244 by 2020. Additionally, businesses have cut their workforces in response to lower demand from automakers. Research forecasts that employment will decline by an annualized 3.4 percent over the next five years, reaching 30,479 jobs.

Recent increases in the trade-weighted index (TWI) have exacerbated the increased competition from imported goods. TWI rises represent the US dollar’s rise versus its main trading partners, lowering the relative cost of imports while increasing the relative cost of exports. As a consequence, exports as a percentage of sales are expected to shrink from 11.9 percent in 2015 to 7.9 percent in 2020, equating to a 12.2 percent yearly reduction to $1.0 billion. This reduction also harmed industry performance over the time, and is mostly attributable to coronavirus-related demand and production contractions. Trade tensions between the United States and China, as well as uncertainties surrounding US-Mexico trade ties, are partly to blame. Exports to Canada and Mexico are predicted to fall by 48.1 percent and 22.4 percent, respectively, in 2020, threatening a major cash stream for industry operators.

Foreign automakers have maintained their market share in the United States during the last five years. This encouraged these automakers to boost local manufacturing in order to fulfill US demand, which resulted in increasing imports of components from their typical international supply chains. Additionally, an appreciation of the US dollar, as assessed by the trade-weighted index, has reduced the relative cost of imported components. However, as a consequence of the coronavirus-related fall in demand in 2020, imports for the Automobile Steering and Suspension Manufacturing business fell 27.2 percent in 2020 alone, driving total values down at an annualized rate of 7.3 percent to $5.6 billion for the five years through 2020.

Domestic motor vehicle manufacturing sector expansion, aided by overall auto production growth, generated revenue for the Automobile Steering and Suspension Manufacturing industry during the five years to 2020. Additionally, sales to the automobile aftermarket, spurred by an aging US fleet, increased demand for industry goods.

However, the spread of the coronavirus across the United States and the rest of the globe in 2020 has resulted in dramatic drops in consumer mood and widespread economic instability, resulting in a fall in vehicle sales and a contraction in overall demand for industrial products. As a consequence, industry revenue is likely to shrink at an annualized rate of 4.8 percent to $12.6 billion over the five years to 2020, with a projected decrease of 24.3 percent in 2020 alone.

The industry’s downturn during the next five years through 2020 is due to its dependence on local automakers. As automotive manufacturing increases, demand for steering and suspension components increases proportionately. As a result, industry operators gained during the majority of the present period as vehicle manufacturing increased in response to favorable macroeconomic fundamentals.

Automobile manufacturers increased their investment in new cars in response to better job levels, better disposable incomes, and low financing rates. Additionally, automakers expanded their product choices to satisfy growing customer demand for more fuel-efficient automobiles, which prompted customers to make further new car purchases. However, with the emergence of coronavirus in 2020 and subsequent losses in new vehicle sales, consumer spending, and consumer confidence, the sector has seen dramatic drops in demand, temporary production shutdowns, and a projected severe loss in revenue.

While recent gasoline price drops have boosted demand for trucks and SUVs, buyers remain concerned about fuel efficiency. Additionally, stringent laws governing the average fleet efficiency of vehicles have compelled manufacturers to invest in more efficient components.

As a consequence of increasing sales of modern steering system technology, the sector has profited from fuel efficiency trends. Industry operators have increasingly concentrated their efforts on delivering electric power steering systems, which have increased their market share. According to studies conducted by Robert Bosch GmbH, electric systems lower CO2 emissions by 10% and the energy used by the steering system by 90%.

Industry expansion has also been aided by aftermarket sales. The average age of the fleet is expected to grow significantly to 11.9 years in 2020, up from 11.5 years in 2015. As price-conscious individuals continued to fix their existing cars to save money, the average age of autos climbed steadily.

The aging fleet of automobiles on US highways has increased demand for replacement parts, particularly steering and suspension components. While the aftermarket is expected to represent a little part of industry income in comparison to sales to automobile original equipment manufacturers (OEMs), it provides a much-needed outlet for industry goods.

Volatility at different pricing points has created difficulties for steering and suspension manufacturers in the five years through 2020. The global steel price, which is an aggregate gauge of the pricing of major raw steel products, is predicted to climb at an annualized rate of 3.9 percent throughout the period, showing substantial year-to-year volatility.

Similarly, the global crude oil price started the era at an all-time high before plunging by double digits in 2015 and 2016. Then, when the supply glut eased, oil prices increased dramatically in 2017. In 2020, the global price of oil is expected to plummet by further 38.0 percent as a result of coronavirus-related production shutdowns and demand declines. Volatility in input prices makes it difficult for businesses to maximize their production levels and pricing strategies.

Volatility in inputs has been a strain on the business as a whole, since operators have difficulties forecasting future costs. Overall, industry profit, defined as profits before interest and taxes, has decreased to 3.6 percent over the last five years, owing mostly to price volatility and profit being squeezed by car OEM needs. Due to the downstream automakers’ concentration and scale, they have substantial negotiating leverage when it comes to car components supply prices.

Recent increases in the trade-weighted index (TWI) have exacerbated the increased competition from imported goods. TWI rises represent the US dollar’s rise versus its main trading partners, lowering the relative cost of imports while increasing the relative cost of exports. As a consequence, exports as a percentage of sales are expected to shrink from 11.9 percent in 2015 to 7.9 percent in 2020, equating to a 12.2 percent yearly reduction to $1.0 billion.

This reduction also harmed industry performance over time, and is mostly attributable to coronavirus-related demand and production contractions. Trade tensions between the United States and China, as well as uncertainties surrounding US-Mexico trade ties, are partly to blame. Exports to Canada and Mexico are predicted to fall by 48.1 percent and 22.4 percent, respectively, in 2020, threatening a major cash stream for industry operators.

Foreign automakers have maintained their market share in the United States during the last five years. This encouraged these automakers to boost local manufacturing in order to fulfill US demand, which resulted in increasing imports of components from their typical international supply chains.

Additionally, an appreciation of the US dollar, as assessed by the trade-weighted index, has reduced the relative cost of imported components. However, as a consequence of the coronavirus-related fall in demand in 2020, imports for the Automobile Steering and Suspension Manufacturing business fell 27.2 percent in 2020 alone, driving total values down at an annualized rate of 7.3 percent to $5.6 billion for the five years through 2020.

Operators in this industry primarily produce and restore steering and suspension systems and components for motor vehicles. Steering wheels, shock absorbers, and struts are included in this category. This industry does not include the manufacture of springs. Automobile Steering and Suspension Manufacturing are nearing the end of its economic lifecycle.

This stage is defined by well-segmented product lines, widespread market acceptance, and gradual technical progress. Industry value added (IVA), which quantifies an industry’s contribution to the entire economy, is predicted to decline at an annualized rate of 0.8 percent during the next decade to 2025. In comparison, the US GDP is anticipated to rise at a 1.9 percent yearly pace for the same time. Although the sector grows at a slower rate than the general economy, it creates generally acknowledged items for broad markets.

Despite an upswing in both sectors, a recent decrease in automobile sales has harmed both automakers and steering and suspension component producers. Additionally, prominent domestic automakers are overhauling their car lines to compete with international transplant manufacturers that promote environmentally friendly, fuel-efficient vehicles.

This has resulted in tremendous innovation within product lines but has not resulted in major technical progress that has resulted in the introduction of new kinds. All of this indicates that the industry is mature. While electric power steering systems have mostly replaced hydraulic power steering systems in automobiles, the product provides the same purpose.

Technological advancements in manufacturing have likewise been modest, symptomatic of a sector nearing the end of its life cycle. This transformation has been driven mostly by the rising usage of automated technology in the manufacturing process.

For instance, automakers have adopted just-in-time inventory and production management concepts, requiring component suppliers to be flexible with their manufacturing schedules. Industry-wide efficiency gains have been achieved via the deployment of tool life management systems, fast die-changing methods, and preventive maintenance. These enhancements resulted in significant reductions in machine downtime and scrap.