Vehicle and Trailer manufacturing Rolls Along – An Industry Update 

The Motor Vehicle Body and Trailer Manufacturing industry produce items for commercial vehicle manufacturers, recreational vehicle (RV) dealers, road freight operators and other transport-related markets. The demand for passenger vehicles manufactured in Australia has been declining for many years and led to the end of local manufacturing in 2017-18. This has caused volatility in the industry and reduced industry revenue in the short term. Fortunately, it’s not all doom and gloom – several key market segments are experiencing increased demand with modest growth forecast for the next five-year period.

Industry product categories

Recreational vehicles include caravans, camper trailers, pop-tops, motorhomes and park cabins. Road freight transport products include trailers and tipper units, T-liners, flat-tops, container skels, dry freight and temperature-controlled freight equipment. This industry also includes bus body manufacturers, motor vehicle converters and operators who carry out vehicle modifications to the bodywork of existing vehicles.

Key drivers of growth

Three key external drivers with the most capacity to increase demand for this industry are: road freight transport; international travellers; and the population aged fifty-plus, with revenue forecast to increase for all of these sectors in 2018-19.

Road freight transport: The demand for freight trailers depends on robust conditions for road freight transport. Stable economic conditions and rising demand for Australian produce in Asian markets is driving higher demand for this sector.

International travellers to Australia: An increase in the number of tourists wanting to travel and sight-see around Australis boosts demand for industry products from RV rental service providers.

The Australian population aged 50 and older:  Retirees over the age of 50 are the strongest demographic group for buyers of RVs, particularly those who regularly travel during their retirement (the ‘grey nomads’). An ageing population increases the pool of potential RV purchasers, and many current retirees are economically well-off from the property market. RVs require labour intensive work, providing a strong source of industry employment.

Industry outlook

In the short term, industry revenue is expected to reduce at an annualised 2.5% over the five years through to 2018-19, to $3.9 billion. The lower sales revenues will be primarily caused by the decline of motor vehicle manufacturers and the subsequent effect on passenger vehicle body sales.

However, stable economic conditions and low-interest rates have enhanced demand for road freight transport and the associated vehicles, parts and components. This, along with increased demand for RVs, has increased industry performance for these sectors, with conditions expected to continue in the near future.

Overall, industry revenue is projected to rise slightly over the next five years as the industry recovers from the end of local passenger vehicle manufacturing and looks to capitalise on segments providing opportunities and growth. Industry revenue is forecast to increase at an annualised 0.3% over the five years through 2023-24, to $4.0 billion.

Key success factors

Industry success is likely to involve:

  • Ability to adjust operations to meet market demand: Manufacturers that can anticipate and quickly adapt to changing market conditions can capitalise on new opportunities.
  • New product innovation: Manufacturers designing and producing innovative, lightweight truck bodies and trailers that provide improved fuel efficiency increase with the desirability of their products.
  • A strong contact base: Industry operators who have sound relationships with downstream resellers and buyers are better placed to maintain steady sales.
  • Superior after-sales service: Companies that offer superior after-sales service will maintain current customers and win new clients through referrals and good reviews.

 

*Source: IBISWorld Industry Report C2312: Motor Vehicle Body and Trailer Manufacturing in Australia (April 2019)

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