AAAA MANUFACTURER RESEARCH MAY 2019 Prepared by ACA Research
Contents
1. Research Objective & Summary 2. Industry Profile 3. Business Sentiment 4. The Export Market 5. Sample Profile
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RESEARCH OBJECTIVE & SUMMARY
Research objective
To a c c u r a t e l y e v a l u a t e the size, composition and future prospects of the Australian automotive manufacturing industry
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Executive Summary
The Australian manufacturing sector is a diverse and integrated industry • Reflecting the diversity of the Australian automotive manufacturing landscape, businesses are producing a range of products, with a common focus towards 4WDs. • Most revenue is coming from sales into aftermarket, with sales to OEMs a minority concern. • Businesses are often part of a an integrated supply chain, actively using both Australian and overseas suppliers and production facilities.
And the industry has a healthy outlook moving forwards
• Although overall revenue has fallen since 2015, the number of businesses operating in Australia has increased, and these companies are optimistic about their growth potential (through and beyond the startup phase). • The main threats to business growth are expected to be external economic issues rather than industry specific problems. • In order to limit the impact of external economic forces, businesses are proactively engaging in marketing as well as investing in technology and R&D to achieve growth.
With the importance of the export market set to increase over the next 3 years • Most manufacturers are exporting products overseas, but their core customer base remains in Australia. • That said, the size and importance of export markets are expected to grow over the next three years. • The USA is currently the key export market for Australian manufacturers, with South America likely to be an important growth market moving forwards. • Despite growth in the Chinese auto market, few Australian manufacturers are targeting it as an export destination.
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INDUSTRY PROFILE
There are 300 automotive manufacturing companies in Australia, employing nearly 10,000 workers, and turning over $4 billion per annum Industry Snapshot There are 300 manufacturing companies in Australia
These businesses employ
9,800 people
vs. 260 in 2015
19%
10-19 years
21%
20-29 years
19%
30-39 years
19%
40-49 years >50 years
$4 billion
vs. 21,000 in 2015
1-9 employees
51%
10-49 employees >50 employees
vs. $5.2 billion in 2015
Annual revenue
Business size
Age of business < 10 years
And have a combined revenue of
33% 16%
<$2m $2m - $4.99m $5m - $24.99m >$25m
50% 25% 15% 10%
8% 13%
S9. How many years ago was your organisation established in Australia? S5. How many staff does your company employ? S4. Which of the following annual revenue ranges is applicable to your organisation? Base: n=61
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With the bulk of revenue coming from sales into the aftermarket (either directly or via third parties) Proportion of Revenue Fromâ&#x20AC;Ś
41%
39%
9%
11%
Direct sales to consumers or trade
Sales to resellers, wholesalers, retailers
Online sales
Sales to OEMs
Q7. What proportion of your revenue comes from the following sources? Base: n=61
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Reflecting the diversity of the Australian automotive manufacturing landscape, businesses are producing a range of products such as accessories, structural components, and additives Parts Manufactured
Accessories
Engine/ Transmission
Chassis
Body
9%
26%
Electrical/ Lighting
6%
Lubricants/ Chemicals/ Coolants
2%
24%
46% Q1. Which type(s) of product does your company manufacture? Q3. And in one sentence how would you describe the specific products you manufacture? Base: n=61
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There is a common focus towards 4WDs, ahead of the other vehicle types for which manufacturers are producing parts or accessories P ro d u c e Pa r t s /A c c e s s o r i e s Fo r â&#x20AC;Ś
The average business is producing parts/ accessories for 4 types of vehicle
86% 70% 58%
56% 46%
40% 26%
4WDs
Passenger Light Performance Truck or vehicles commercial vehicles buses vehicles
Q6. Do you produce parts or accessories for any of the following types of vehicle? Base: n=61
20%
18%
12%
Defence or Caravans or Electric or Autonomous Trains or mining trailers hybrid vehicles Trams vehicles vehicles 10
4WDs are most likely to be the focus for more specialised manufacturers, with other vehicle types likely to be an additional area of expertise, rather than a separate line of activity P ro d u c e Pa r t s /A c c e s s o r i e s Fo r â&#x20AC;Ś Manufacture parts for Up to 3 types of vehicle
Manufacture parts for 4-6 types of vehicle
Manufacture parts for 7-9 types of vehicle
4WDs
70%
98%
100%
Passenger vehicles
39%
90%
100%
Light commercial vehicles
23%
72%
100%
Performance vehicles
33%
66%
82%
Truck or buses
7%
62%
93%
Defence or mining vehicles
3%
48%
92%
Caravans or trailers
1%
10%
82%
Electric or hybrid vehicles
1%
25%
46%
Autonomous vehicles
14%
3%
40%
Trains or Trams
1%
13%
28%
Q6. Do you produce parts or accessories for any of the following types of vehicle? Base: <3 vehicle types n=23, 4-6 vehicle types n=19, 7-9 vehicle types n=19
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Manufacturers are typically part of an integrated supply chain, actively integrating Australian and overseas suppliers and production facilities Product Sourcing & Production
29%
of the raw
materials are from within Australia
Q4. What proportion of your products are manufactured within Australia? Q5. What proportion of the raw materials you use within your business have an overseas country of origin Base: n=61
50%
of the
products are manufactured within Australia
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BUSINESS SENTIMENT
Automotive manufacturing businesses face a range of threats, including a consistent need for skilled staff who can deliver in an increasingly technology-driven environment Biggest Threats
Rising costs (e.g. power, fuel)
51%
Access to skilled labour
41%
Fluctuating Australian dollar
40%
Australian economic conditions
40%
Global economic conditions
38%
Innovation and disruption to our marketplace
28%
OEMs limiting customer choice
24%
Government regulation Access to vehicle spec, info and diagnostic data
Q20. Over the next three years, what are the biggest threats facing your business? Base: n=61
22% 8%
14
Despite these threats, the outlook for Australian automotive manufacturing is positive, with almost universal predictions of revenue growth over the next 12 months Expected Revenue Growth over next 12 months
1%
3%
4%
52%
41%
Decrease significantly
Decrease a little
Remain stable
Grow a little
Grow significantly
Q17. Thinking about the next 12 months, do you expect your business revenue toâ&#x20AC;Ś? Base: n=61
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Revenue growth is being driven by strong market demand, underpinned by proactive marketing and robust growth strategies To p 3 D r i v e r s O f G r o w t h
Q18. Why do you expect that? Base: Businesses expecting growth n=52
1. H a v e a g r o w t h s t r a t e g y i n p l a c e
28%
2. Market demand increasing
20%
3. Increased marketing
20%
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One in three manufacturers are also exploring different retail channels, tapping into the growth of DIY and IBYDIFM Marketplaces Used
None
69%
Note: DIY – Do It Yourself, IBYDIFM – I Buy, You Do It For Me. Q8. Which (if any of the following online marketplaces does your business use> Base: n=61
eBay only
Amazon only
eBay & Amazon
13%
7%
11%
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Businesses are also differentiating by moving up the value chain, investing in new technologies and R&D to drive the development of new products and services Business Priorities 70%
39%
Developing new products and services
Investing in new technology
34%
Investing in R&D
Q19. Looking ahead to 2020, what are the main priorities for you business? Base: n=61
33%
30%
Expanding into Employing more new industries or skilled employees sectors
4%
3%
Reducing headcount
Investing in offshore manufacturing facilities
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THE EXPORT MARKET
Almost three quarters of Australian automotive manufacturers actively export products, comprising 16% of total Australian automotive manufacturing, and $640m in revenue
16% This equates to
of products are exported overseas
$640m
in combined export revenue (vs. $800m in 2015)
Proportion of products exported 30%
29% 19% 10%
1-9%
10-19%
Q10. What proportion of the products your business produces in Australia are exported? Base: n=61
20-29%
12%
>30%
Do not export
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The US is the key export market for Australian automotive manufacturers, ahead of Europe, New Zealand, and the Middle East Export Markets
Main Market Secondary Market 20%
25%
38%
19% 25%
11%
19% 4%
Other
10%
South America
Singapore
Mexico
Malaysia
UK
Q12. Which markets are your locally produced products exported to? Q13. Which is your main export market? Base: n=61
6%
3%
2%
Korea
1%
13%
10%
Japan
1%
6%
Indonesia
1%
12%
India
2%
Africa
2%
Russia
10%
Hong Kong
10%
China
10%
Thailand
6%
12%
Pacific Islands
9%
Canada
10%
Middle East
11%
NZ
15%
Europe
USA
20%
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Looking to the future, Australian automotive manufacturing businesses are positive about growth in their export market Expected change in volume of exports over next three years
0%
1%
16%
33%
49%
Significantly lower
A little low
About the same
A little higher
Significantly higher
Q16. Looking forward three years, how do you expect the volume of products being exported to change? Base: n=61
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With the proportion of manufacturers selling products outside of Australia also predicted to increase over the next three years Export Behaviours
70%
Ye s , w e e x p o r t t o o v e r s e a s m a r k e t s
13%
No, but we are actively exploring overseas markets
1%
No, but we intend to explore overseas markets within the next three years
16%
No, And we do not intend to within the next three years
Q9. Does your business sell products outside Australia? Base: n=61
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Manufacturers are seeing the most significant growth opportunities in South America, ahead of Europe, the Middle East, Canada and Africa
Expected Future Export Destinations
50%
50%
53%
10%
7%
63%
72%
81%
74%
81%
Not using but considering 86%
87%
88%
88%
Not considering
88%
88%
75%
82%
93%
94%
94%
98%
89%
7% 4%
Other
Currently using
1%
Q12. Which markets are your locally produced products exported to? Q14. Which overseas markets are you actively exploring? Base: n=61
1%
1%
1%
1%
2%
15%
8%
14%
13%
12%
11%
11%
1%
11%
10%
10%
10%
0%
3%
6%
6%
3%
0% 2%
China
Russia
Japan
South America
Africa
Hong Kong
Mexico
Korea
India
17%
1%
Pacific Islands
19%
5%
Indonesia
26%
Singapore
Middle East
USA
Europe
NZ
28%
9%
Thailand
0%
40%
Malaysia
40%
2%
UK
49%
Canada
9%
Exporting to China is expected to remain low
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SAMPLE PROFILE
The 2019 AAAA Manufacturers Survey is based on data collected from 61 automotive aftermarket manufacturers, across a range of company sizes and areas of specialisation Role
Annual Turnover
Business Owner/Partner/Director
59%
CEO
13%
Operations Manager
9%
Marketing Manager
7%
Divisional GM/Director
6%
Manufacturing Manager
4%
Financial Controller
1%
50%
< $2 million
25%
$2 - 4.99 million $5-24.99 million >$25 million
Age of Business
15% 10%
Types of Products 46% 26% 24%
Chassis components
8%
Safety or protection components
5 - 9 years
13%
10 - 19 years
21%
20 - 29 years
19%
30 - 39 years
19%
40 - 49 years 50 years or longer
8% 13%
20%
10 - 19 employees 20 - 49 employees 50 - 74 employees
Electrical or lighting components
6%
75 - 99 employees
S3. What is your role in the company? S4. Which of the following annual revenue ranges is applicable to your organisation? S5. How many staff does your company employ in Australia? S9. How many years ago was your organisation established in Australia? Q1. Which type(s) of product does your company manufacture? Base: n=61
31%
5 - 9 employess
6% 2%
20%
1 - 4 employees
Body components
Lubricants, chemicals or coolants
7%
Total Employees
Accessories Engine or transmission components
< 5 years
100+ employees
14% 6% 3% 7%
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Our sample also includes organisations based across the country, with head offices covering a mix of metropolitan and regional areas
Head Office - State
Manufacturing Operations - State
QLD
WA
41%
9%
NSW/ACT VIC/TAS QLD SA/NT WA
14% 14% 34% 10% 3%
Manufacturing Operations - State NSW
20%
SA/NT
8%
VIC/ TAS
22%
Metro
Regional
77%
23%
S6. Where is your companyâ&#x20AC;&#x2122;s Australian head office located? S7. Would you describe your companyâ&#x20AC;&#x2122;s Australian head office location as being in a..? S8. Where are your manufacturing operations located? Base: n=61
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PLEASE CONTACT US WITH ANY QUESTIONS
Lesley Yates Senior Manager - Government Relations & Advocacy lesley@aaaa.com.au / 03 9545 3333 or 0402 005 476 AAAA â&#x20AC;&#x201C; Australian Automotive Aftermarket Association
Suite 16, Building 3, 195 Wellington Road, Clayton, Victoria, 3168