Too Many Competitors Spoil the Aftermarket for Constant Velocity (CV) Driveaxle, Boot Kit Manufacturers

SAN JOSE, Calif., Feb. 25 -- Intense competition is limiting market share and company growth within the constant velocity driveaxle and boot kit aftermarket despite increased sales generated by the success of sport utility vehicles (SUVs).

New analysis from Frost & Sullivan (www.automotive.frost.com ), North American CV Driveaxle and Boot Kit Aftermarket, reveals that this industry generated revenues exceeding $342 million in 2001 and is projected to near $490 million in 2007.

``The growing popularity of SUVs in the last few years has propelled demand for aftermarket CV driveaxles and boot kits,'' says Frost & Sullivan Industry Analyst Joerg Dittmer. ``However, extreme competition, lack of product differentiation, and low barriers to market entry have led many participants to lower their prices, which, in turn, has forced some major rebuilders to cut prices to maintain market share and sales volumes.''

The industry has seen significant price and profit reduction, much to the detriment of suppliers. With an overabundance of small rebuilders and remanufacturers in the marketplace, larger remanufacturers that emphasize quality are under constant pressure to maintain their market presence, preserve volumes, and remain profitable. However, this is becoming increasingly difficult as foreign companies enter the field.

``The CV driveaxle and boot kit aftermarket is facing growing competition from price-competitive imports, especially from developing countries,'' says Dittmer. ``Products manufactured overseas have significantly lower prices because of reduced labor costs as well as less-stringent environmental protection laws. In the end, these foreign imports are sold as part of a domestic manufacturer's second line, or as the exclusive product line for an importer.''

To successfully compete against foreign and domestic companies, manufacturers must carry out acquisitions that can provide improved consumer relationships, access to additional distribution networks, and extended geographic reach. Corporate management should monitor rival firms for opportunities to strengthen their current position.

Frost & Sullivan presents the 2002 Marketing Engineering Awards to companies that have worked diligently to make a positive contribution to the CV driveaxle and boot kit aftermarket. These market-specific awards are presented to: American Remanufacturers, Inc., Cardone Industries, Inc., and Mevotech, Inc.

Frost & Sullivan is a global leader in strategic market consulting and training. This ongoing research is part of the Automotive Aftermarket Subscription, which also includes market analyses on the North American Radiator Aftermarket and U.S. Steering and Suspension Parts Aftermarket. Frost & Sullivan also offers custom consulting to a variety of national and international companies. Executive summaries and interviews are available to the press.

North American CV Driveaxle and Boot Kit Aftermarket Report: A041