Imagine driving in a car without brakes.
(Especially if you were on the Autobahn…. Now, wouldn’t that be insanity?)
Brakes, I think we can all agree, are one of the most important components of motor vehicles today. That’s precisely why I decided to look into the automotive brakes manufacturing industry in this month’s industry report.
Based on the findings in the May 2018 IBISWorld industry report by Robert Miles, here are three main trends for the automotive brakes manufacturing industry.
1) Though the automotive brakes manufacturing industry grew over the past five years, the annual growth rate is predicted to slow down from 2018-2023.
From 2013-2015, things looked good for the automotive brakes manufacturing industry. Growing at an annualized rate of 2.7%, this industry thrived as more and more consumers began purchasing new cars post-Recession.
Based on their industry research, however, IBISWorld predicts that this trend will reverse starting this year and that the annualized rate will decline by -0.1%.
This is due to two main factors. First, American manufacturers may face rising competition from their foreign counterparts, mostly because they have lower costs of labor than the U.S. This is because the industry, already quite globalized, is anticipated to become even more so from 2018-2023.
Second, IBISWorld anticipates that sales of new cars will go down over the next few years. As fewer cars are sold, fewer braking systems will be purchased.
2) Though the market share concentration is low, two main companies have stood out from the crowd.
No major players have carried a large portion of the automotive brake manufacturing industry’s market share over the past five years, but two companies have held more than 5% of the market share: Akebono Brake Corporation and Aisin Seiki Co. Ltd.
Akebono Brake Corporation, an American subsidiary of a Japanese brake company, currently carries 11.2% of the automotive brake manufacturing industry’s market share. Aisin Seiki Co. Ltd. (whose brand names include Uniroyal, General, and Continental) is based in Japan and holds 7.5% of the market share.
3) To be successful, automotive brake manufacturers must foster relationships with foreign automakers, invest in cutting-edge technologies, and investigate different ways to keep costs down.
Miles identifies a few different ways that automotive brake manufacturers can remain successful in an industry that’s predicted to slow down and face foreign competition. Of these success factors, three include: foreign automaker sales, new technologies, and cost-saving efforts and processes.
Since U.S. new car sales are expected to decline, IBISWorld advises that companies in this industry build customer relationships elsewhere – specifically, with foreign automakers. Whether exploring more opportunities with current customers or establishing business with new clients, this is one way that automotive brake manufacturers can succeed.
Additionally, as with anything automotive-related, having access to and implementing cutting-edge technologies is paramount to industry growth and staying power. Two examples of technologies which IBISWorld specifically highlights are regenerative brakingand brake-by-wire technologies.
Finally, automotive brake manufacturers may need to look into cost-saving measures if downstream demand does go down as IBISWorld predicts. The cost of labor in the U.S. is higher than in other countries, which already leaves us at a disadvantage. To fight foreign competition, manufacturers will most likely have to enact changes like closing down underperforming facilities or pursuing industry consolidation.