GE Capital describes margins as 'difficult'
GE Capital has released its "Automotive Industry Economic Outlook Survey" for the fourth quarter of 2014. The national survey of middle market companies leaders revealed that despite a thriving automotive sector, automotive firms are having a hard time maintaining margins.
(GE Capital defines "middle market companies" as having annual sales ranging from $10 million to $1 billion.)
Here are three of the key findings:
1. "The automotive sector of the middle market continues to thrive as the broader economy slowly recovers. The proportion of firms reporting year-over-year increases in revenue and employment is higher now than in March of this year." Light vehicle sales "will continue to rise," said the firms.
2. "Employment in the sector is expected to pick up in the coming year, with nearly half of the firms expecting to add head count." The expected average year-over-year growth is nearly 5%.
3. "An increasing cost structure has made it difficult for automotive firms to maintain margins, and many feel margins may stagnate over the coming year." A majority of them expect to increase prices in 2015.
In addition to maintaining margins, the firms singled out the cost of healthcare and the uncertainty of government action as major concerns.
"Automotive firms are very confident in their local economies and also express optimism about the state of the U.S. economy," according to the company. "They are less confident in the global economic environment.
To reach the second-quarter 2014 report, click here.