- Heavy equipment seems to be in the midsts of a supply glut where the risks outweigh the rewards.
- Emerging markets are the key for car manufacturers, and positioning for growth there is essential.
- Car manufacturers offer the possibility for long term outperformance by proper due diligence and geographic growth analysis.
Heavy equipment, machinery and automotive manufacturing are important parts of the economy, but the sector is a cyclical one. In periods of economic growth, the majority of people buy new cars, and new infrastructure and homes are built, which increases the demand for machinery. However, this demand only lasts up to a point after which people have already purchased their new car—and aren’t likely to replace it for 7 years—and there is an abundance of machinery available as machinery is typically made to last for more than 20 years. More →