China’s MV drive sales drop in 2014 and 2015

  • July 30, 2015
  • News

July 30, 2015 -  China’s MV drive sales declined by more than 10% in 2014 to $2.5 billion as increased competition and lower demand eroded prices, says HIS.

Enticed by double-digit market growth in 2012 and 2013, many industrial automation suppliers without an MV drive offering (Danfoss, Regal Beloit, General Electric and Schneider) acquired smaller MV drive suppliers such as Vacon, Benshaw, Converteam and LD Harvest, in the process providing additional scale, capital, sales channels and more comprehensive solutions to customers.

As commodity prices fell in 2013 and oil prices in 2014, investment in oil and gas, mining, metals and cement industries (representing more than 60% of MV drive revenue) dried, leading to a decline in global 2014 MV drive revenues and a predicted decline in 2015. With more competitors in the MV drives market and lower demand, price competition increased, leading to 5% to 10% price concessions in most regions. IHS predicts MV drive revenues will contract again in 2015 and remain weak even into 2016. From 2017 to 2019, IHS predicts global MV drive demand will grow and price concessions will revert, leading to a more stable pricing environment.

The impact of lower commodity prices varies by industry, with industries tied to the production of commodities experiencing more competition, declining MV drive prices, and lower revenue, while industries such as plastic and rubber are benefitting from lower input costs and freeing up cash flow for purchases of MV drive equipment.

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