Transportation Market Update – Facts and Trends
Bishop tracks 13 market sectors for electronic interconnect sales trends. The combined annual revenue of all the market sectors was $4.3 trillion in 2012 and grew 4.9% over 2011. Of the 13 market sectors, transportation was the second-fastest growing market sector in 2012, at 5.5% year-over-year, with combined revenues of $328.9 billion. Profitability was $17 billion at 5.2% of sales.
Bombardier had the most growth in 1Q13, at 23.8% year-over-year to $4.3 billion, due to its aerospace business. Bombardier designs and manufactures regional jets, which have been selling particularly well as the airlines employ these smaller (more efficient) jets to service small-to-medium-size markets. The company also manufactures light rail vehicles, metro trains, and regional trains, including high-speed trains and locomotives.
Wabash National had the second-highest growth rate for 1Q13, at 16.8% year-over-year to $324 million in annual sales. Wabash manufactures commercial trailers for the trucking industry, and sales have increased due to the replacement of aging trucks in the present fleet since 2008. In 2010/2011, the age of the North American fleet of trailers reached an all-time high of 8.3 years.
Airbus (EADS) had growth of 12.8% year-over-year in the first quarter. On a unit basis, deliveries were up 7.4%. The sales increase was primarily with its narrow-body A320 series aircraft. Order activity for all aircraft was very strong, up almost 500% over 1Q12.
Harley-Davidson motorcycles had a year-over-year sales increase of 9.9% in the first quarter. Retail sales, however, were down 9.1% due to strong 1Q12 sales and current worldwide macroeconomic issues.
Boeing experienced a slight year-over-year decline in 1Q13. Boeing increased production on its 737 and 777 aircraft, while sales of the 787 were impacted by the Dreamliner’s battery problems. Order activity was strong for Boeing, which now has a record backlog of $324 billion.
Volvo and Daimler were both down year-over-year, primarily due to lower sales in the European market caused by continuing macroeconomic conditions.
Cummins Engine sales declined 12.3% in 1Q13 year-over-year. The company attributed the decline to weakness in the mining, oil and gas, and power generation markets.
PACCAR had the largest decline in this segment at 17.8% year-over-year. It manufactures commercial trucks, including Kenworth and Peterbilt. It attributes its decline to lower industry sales in the quarter.
The following table shows the results for the 13 companies we track in this market sector.
As can be seen in the following chart, year-over-year sales growth slowed substantially in 3Q12 and was negative for the last two quarters. Sequentially, first quarter 2013 sales declined 13.6% from the fourth quarter of 2012.
Trends in the transportation Industry
- Worldwide macroeconomic conditions continue to suppress sales in this market sector. This is particularly true in Europe.
- Demand for business aircraft is expected to remain flat in 2013.
- Demand for commercial aircraft (narrow body jets and regional jets) will be up single digits for 2013 as carriers replace aging and inefficient aircraft.
- The truck and bus markets are expected to be up slightly in 2013 with the slow economic recoveries.
- The markets for motorcycles and ATV may pick up modestly in 2013 with improving economies and pent-up demand.
Impact on the Cable Assembly Industry
- Price pressure on cable assemblies will continue to increase as the transportation industry grapples with declining net incomes, down almost 35% in 1Q13.
- Lightweight materials will continue to be emphasized by commercial aviation as they strive to improve fuel economy in their aircraft.
- The amount of interconnect will continue to grow in the truck and bus markets as the manufacturers add electronics for safety and navigation systems.
Bishop & Associates projects the worldwide market for transportation cable assemblies to grow 6.2% in 2013 to $8.2 billion. At 11% year-over-year growth, China will be the fastest-growing region in 2013 for this market sector.
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