Radiator Aftermarket Boiling Over

SAN JOSE, Calif.--Competition in the North American radiator aftermarket is expected to reach new levels as global companies go full-steam ahead toward increasing their market shares.

According to new strategic research from Frost & Sullivan, entitled, “North American Automotive Radiator Aftermarket,” this industry generated revenues of $480.1 million in 1999. Revenues are projected to reach nearly $650 million by 2006.

The biggest question facing this market is how will the industry combat the growing threat from large manufacturers, such as Visteon Climate Control Systems and Delphi Harrison Thermal Systems; companies that are moving away from being just original equipment suppliers and beginning to aggressively pursue the aftermarket.

Visteon began its big push for the U.S. radiator aftermarket in 1998 through its acquisition of ARS Inc. Delphi is expected to enter into the U.S. aftermarket with even greater vigor in 2001, when it would be able to distribute under its own brand name and not just GM-SPO’s ACDelco. These multi-billion dollar global giants are acquiring smaller market participants becoming one-stop aftermarket automotive engine-cooling and air-conditioning suppliers.

“Visteon, a $19 billion company, and Delphi, a $29 billion company, could prove to be extremely formidable competitors,'' says Frost & Sullivan industry expert Meenakshi Ganjoo. “However, Delphi does need to make some major production and distribution decisions in the near future to make a significant dent in the aftermarket. Like Visteon, it is probable that Delphi will achieve this through acquisitions.”

The consolidation in the radiator aftermarket challenges smaller market participants to find ways to maintain their market share. Many of these smaller manufacturers will more than likely either be absorbed by their larger competitors or leave the market completely. To remain competitive with these large companies, smaller aftermarket manufacturers will have to either broaden their product lines or focus on niche markets.

“Those manufacturers who cannot supply all the parts will be left behind,” says Ganjoo. “One of the challenges for aftermarket manufacturers is to maintain adequate parts coverage, while containing costs. These market participants must be able to supply all variations of radiators promptly. The company that can ship the right part in the shortest amount of time will win the race.”

Smaller manufacturers can hold onto their market share by meeting original equipment manufacturers’ (OEMs) standards and providing needed parts to larger manufacturers. Large companies will outsource some of their work to those manufacturers meeting these requirements.

“Manufacturers who are Tier I suppliers or are able to meet OEM standards will be better placed to emerge successfully,” says Ganjoo. “It is likely that most of the bigger manufacturers will not be able to produce a complete radiator line. In that case, they may acquire the parts they need from other aftermarket manufacturers.”

Frost & Sullivan presents the 2000 Marketing Engineering Awards to companies that have worked hard to make a positive contribution to the North American automotive radiator aftermarket industry; the Competitive Strategy Award is presented to Visteon Climate Control Systems Ltd.

For more information, contact www.frost.com.