Axle and Transaxle Manufacturing
Business for Sale Industry Economics
2005 - 2020
2020 - 2026
The Axle and Transaxle Manufacturing sector has declined over the next five years due to COVID-19 (coronavirus) instability. Axles are manufactured by industry operators. Axles are the central shafts that link two parallel wheels of a vehicle. They also make transaxles, which integrate the axle’s function, the transmission’s gear shifting components, and the power splitting abilities of the auto differential. Vehicle production accounts for the majority of industry income.
In the midst of the coronavirus epidemic, new automobile sales have dropped 29.9 percent in 2020. As a result, industry sales is predicted to fall at a 6.1 percent yearly pace to $6.9 billion in the five years through 2020. However, this includes a 25.5 percent drop in 2020 due to weakening consumer mood, which is likely to dampen vehicle manufacturing throughout the year.
Revenue in the industry has been boosted further as manufacturers have changed production plans to produce more light trucks rather than sedans and small automobiles. Consumers have regularly wanted more trucks and SUVs as gasoline prices have fallen for much of the decade, and automakers have adjusted production schedules appropriately.
The size and weight of an axle and transaxle are governed by the vehicle in which it is installed. Larger industrial items are often offered at a higher price point, which helps the sector’s income. However, increased input and labor expenses are predicted to contribute to diminishing profitability among industry operators during the next five years, until 2020.
Revenue for the Axle and Transaxle Manufacturing business is expected to expand at a comparable rate over the next five years, until 2025. Strong macroeconomic circumstances are predicted to persist, and new car sales are predicted to rise, boosting industry income.
Furthermore, rising steel costs may allow axle producers to charge downstream automakers a greater price for these powertrain components. However, due to overall declining vehicle output and slowing exports throughout the five-year period, industry income should remain constrained. As a result, revenue is expected to grow at an average rate of 5.6 percent to $9.1 billion during the next five years, reaching $9.1 billion in 2025.
Over the next five years, revenue generated by the Axle and Transaxle Manufacturing industry is predicted to drop. COVID-19 (coronavirus) was labeled a pandemic by the World Health Organization in March 2020, and it began to impair global car manufacturing. Automobile production schedules and new vehicle sales have a direct impact on industry performance in general.
Almost every vehicle requires industry-relevant products to drive and operate effectively, resulting in a nearly one-to-one ratio of cars manufactured to industry-relevant products. Because of COVID-19 (coronavirus), research expects new automobile sales to fall at a 7.3 percent annualized pace over the next five years through 2020.
Furthermore, industrial operators have profited from lowering fuel prices, which have been a feature for the bulk of the time. This has contributed to a trend in customer desire toward bigger, lighter automobiles. The drop in crude oil prices has boosted demand for light trucks and sport utility vehicles.
These changes aided industry success since bigger cars need heavier or more sophisticated axles and transaxles, allowing industry makers to charge greater prices. However, COVID-19 (coronavirus) decreases have hampered these increases.
Major automakers have also streamlined production processes to minimize operational costs and refocused product offerings to match customer demand during the last five years. These measures immediately benefited the sector, resulting in increased operating capacity.
The increased capacity has aided operators in meeting rising demand. Due to COVID-19 (coronavirus)-induced volatility, industry revenue is predicted to drop at a 6.1 percent yearly pace to $6.9 billion over the next five years. Furthermore, forecasted losses in new car sales and consumer mood will dampen vehicle manufacturing, restricting industry profitability.
Declining consumer mood is frequently interpreted by manufacturers as a warning that consumers will purchase fewer vehicles, forcing them to acquire fewer engine components such as axles. As a result, sales in the industry is predicted to fall by 25.5 percent in 2020.
Revenue growth for operators in the Axle and Transaxle Manufacturing business is predicted to be very constant during the next five years, up to 2025. Overall, persistent economic resilience and a minor increase in new car sales relative to the present period are likely to contribute to a comeback in the sector.
Furthermore, in addition to a growth in the number of cars produced, an increasing proportion of these cars having all-wheel-drive capabilities should contribute to a rise in demand for more complicated, more expensive industry-relevant items. As a result, research forecasts that industry sales would return from COVID-19 (coronavirus)-induced lows, rising at an annualized pace of 5.6 percent to $9.1 billion over the next five years.
Furthermore, as more light cars become available with all-wheel drive, operators are expected to see a rise in demand for transaxles. According to WardsAuto, the percentage of US-made light cars with all-wheel drive climbed from 34.6 percent in 2014 to 42.7 percent in 2017 (latest available data), and this trend is expected to accelerate over the next five years through 2024.
All-wheel drive necessitates the installation of more complicated and hence more expensive industry-relevant components in contemporary automobile models. During the forecast period, this tendency is likely to favor moderate market revenue growth.
Over the next five years, it is projected that consistent demand for industrial goods, as well as greater efficiency, would reduce the requirement for new employees. This will also be the case if operators try to make up for lost profits from the prior time. Because growing automation will likely reduce the need for certain peripheral tasks, operators will recruit fewer personnel.
As a result, employment in the industry is expected to rise modestly, with an annualized 3.5 percent increase to 16,411 jobs over the next five years. Despite these efforts, industry profitability is likely to remain relatively flat over the next five years. As a result, axle and transaxle manufacturers will almost certainly continue to combine their businesses. Over the next five years, the number of industrial firms is predicted to grow at a sluggish annualized rate of 0.3 percent to 78 firms.
The industry of Axle and Transaxle Manufacturing is nearing the end of its life cycle. Industry value added (IVA), a measure of the industry’s contribution to the economy, is expected to fall at an annualized rate of 1.0 percent over the next ten years to 2025, while GDP is expected to expand at an annualized rate of 1.9 percent over the same time.
Although IVA is predicted to lag behind the broader economy over the next decade, it is nevertheless in line with a mature industry. Furthermore, the number of firms is predicted to fall somewhat during the next ten years, leading to progressive consolidation in this area.
Overall, automotive component makers, such as industry-relevant operators, are playing a growing role in the automobile production process. As a result, the expansion of the Axle and Transaxle Manufacturing business is intimately linked to the expansion of industries involved in the production of automobiles, trucks, and special-purpose vehicles. These industries are highly associated with general economic growth, indicating that they are mature.