Greater Stress on Product Differentiation to Expand Revenues in Mature Auto Parts Aftermarket, Says Frost & Sullivan

SAN JOSE, Calif., March 25 -- As increasing price pressures from auto parts distributors drive down profitability, new product lines and pricing strategies are providing participants with means to increase sales.

New analysis from Frost & Sullivan (http://www.transportation.frost.com/ ), North American Automotive Starter and Alternator Aftermarket, reveals that the industry generated revenues totaling $1.30 billion in 2002. Total market revenues could reach $1.66 billion in 2009.

The growing price-negotiating power of retail distributors along with their consolidation process is leaving participants with a reduced and segmented customer base. Fewer customers mean harder competition and a greater need to differentiate.

"Participants have launched a number of differentiation initiatives in the past, which have been followed by competitors," says Frost & Sullivan Industry Analyst Alfonso Corredor. "First came quality and ISO certification, then innovative warranties like lifetime, free tow, and other similar offerings."

The entry of sophisticated products with higher price tags into the aftermarket is driving the average unit and the overall industry unit price. The trend is reinforced as diminishing demand pushes old starter and alternator models out of the aftermarket.

Remanufacturers are striving to provide very high quality products and change the association of poor quality with remanufacturing. Many original equipment manufacturers are foraying into the market through acquisitions and direct use of their manufacturing facilities for remanufacturing in low volumes.

Larger lifecycles and consolidation in the distribution sector are increasing core availability, causing a drop in prices, reducing core values, and deducting core credits.

"Improving product offerings and reducing prices on popular parts will help domestic manufacturers fight off the competition from imported Taiwanese and Chinese products," says Corredor.

Frost & Sullivan will hold a conference call at 3:00 p.m. (EST) on Thursday, March 27, 2003 to provide manufacturers, end-users and other industry participants an overview, summary, challenges and latest coverage on the North American Automotive Starter and Alternator Aftermarket. Those interested in participating in the call should send an email to Cynthia Cabral - Media Relations Executive at ccabral@frost.com .

Frost & Sullivan is a global leader in strategic growth consulting. This ongoing growth opportunity analysis is part of the North American Automotive Aftermarket Subscription, which also includes market insights on North American Ignition Parts Aftermarket and North American Automotive Entertainment and Navigation Systems Market. Frost & Sullivan also offers custom growth consulting to a variety of national and international companies. Executive summaries and interviews are available to the press.

       North American Automotive Starter and Alternator Aftermarket
                               Report: A394

   Contact:
   Cynthia Cabral
   Media Relations Executive
   P: 210.247.2440
   F: 210.348.1003
   E: ccabral@frost.com
   www.frost.com

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