As electronic content in cars continued to outpace growth in unit volume, the automotive cable assembly market was up 7.2% in 2014.
Bishop tracks 12 companies in the automotive market sector. This market had six consecutive quarters of year-over-year growth before 4Q14, as measured by these 12 companies’ revenues. In 2013, these companies grew 1.2% year over year. The combined revenues grew 4.6% year over year in 1Q14, 1.8% in 2Q14, and 3.2% in 3Q14, then contracted 1.4% in 4Q14. Growth for the full year was 1.9%. Compared to these companies, the cable assembly market for the worldwide automotive market sector grew 8.2% in 2013 and 7.2% in 2014. The cable assembly market for automotive is projected to grow 8.1% in 2015.
Bishop follows electronic interconnects sales trends in 13 markets. The combined annual revenue of all the market sectors was $4.35 trillion in 2014, growing 1.9% over 2013. Of the 13 market sectors, automotive was the eighth fastest-growing market sector in 2014 at 1.2%, with combined revenues of $1,379.0 billion. Profitability was $65.8 billion at 4.8% of sales.
Daimler had the most growth in 2014, at 14.4%, to $97,524 million. Fourth quarter sales were up 6.4% over the prior year. Net income was 7.9% in 2014, up 45.2% over 2013. The sales increase is attributed to improving car sales in Europe.
Borg Warner had the second-largest increase in 2014 at 11.7% year over year to $8,304 million. 4Q14 revenues were up 5.7% year over year. Net income was at 7.9%, up 5.1% over the prior year. Borg Warner provides variable cam timing, electronic differentials, turbo systems, and emission systems that help improve many cars’ fuel consumption and ecological impact.
Lear Corporation grew its sales 9.2% in 2014 to $17,727 million. The company makes seating systems and wiring harnesses for automotive applications.
Fiat grew 9.1% in 2014 to $128,258 million. The company, however, lost $160 million in net income for the year.
Even though some of the auto companies grew or contracted in the low single digits, the electronic content per vehicle continues to go up, which accounts for the increase in the cable assembly business in 2014.
The following table shows the results for the 12 companies Bishop tracks in the automotive market sector.
As shown in the following chart, year-over-year sales results had been improving since 1Q13 until the slight contraction in 4Q14. Sequentially, 4Q14 sales were up 1.2% from the third quarter of 2014.
Trends in the Automotive Market
- The electronic content, and thus the interconnect content, has increased in light vehicles, and this trend will continue through at least the next five years. Automotive is using more electronics in the infotainment systems, safety systems, and control modules installed in cars. Systems that were mechanical are being converted to electromechanical and electrical systems.
- Europe’s stagnant market for cars caused by its economic recession created pent-up demand for new cars. Just as happened in North America, the average age of cars in Europe has increased. As its economies have improved, its car sales are increasing, which further helped its economies (and car sales).
- Plug-in hybrid and battery electric vehicles (PEVs) are a small percentage of the automotive market sector, but they are growing at rates well above their gas/diesel-powered brethren. HPEVs are loaded with specialized high-voltage cable assemblies as well as the assemblies normally found in gas-powered vehicles, so they offer significant opportunities for the cable assembly suppliers.
- Aluminum wire is increasingly being used in passenger car wire harnesses. To reduce weight and improve gas mileage, the automotive companies are turning to aluminum wire, amongst other efforts. Aluminum wire always has the potential issue of galvanic corrosion between the wire and the beryllium-copper or phosphorous-bronze contacts. Companies like TE Connectivity and Delphi have come up with solutions that alleviate this concern.
- Passenger car production is on the rise. Worldwide, according to the OICA, unit production rose 2.6% in 2014 to 89,747,430 cars. China grew 7.3% in 2014, Europe was up 4.4% and North America rose 5.6% (0.7% in the US).
Bishop & Associates estimates the worldwide market for automotive cable assemblies grew 8.1% in 2014 to $41.1 billion. At 11.9% year-over-year growth, China was the fastest-growing region in 2014 for this market sector. The cable assembly market is projected to grow 5.2% in 2015.