Challenges in Fuel Pump Aftermarket Requires Collaboration Among Competitors

PALO ALTO, Calif.--Oct. 2, 20039, 2003--As the trend in the North American fuel pump aftermarket increasingly moves toward electric fuel pump modules, companies are finding themselves forced to contend with a host of related challenges in terms of manufacturing costs and complexity.

New analysis from Frost & Sullivan (www.transportation.frost.com), North American Fuel Pump Aftermarket, reveals revenues in this industry totaled $330.6 million in 2002 and are projected to reach $402.4 million by 2009.

"The transition from mechanical to electric fuel pumps in the last two decades and the growing demand for electric fuel pump modules in the aftermarket has made the manufacturing process a far more complex and costly one," observes Frost & Sullivan Industry Analyst Christopher Chen.

Powerful distributors capable of wresting huge price concessions from suppliers are adding to companies' woes. Confronted by rising manufacturing costs on the one hand and thinning profit margins on the other, companies will have to start thinking 'outside-the-box' to develop new and inventive strategies.

"Competing in the fuel pump aftermarket is becoming an increasingly expensive affair, forcing companies to reconsider their go-to-market approaches," says Chen. "For companies to succeed, they have to recognize innovative forms of alliance with other competitors in the form of informal partnerships or new joint ventures."

Essentially, the situation in the aftermarket is calling for a radically different approach. Given the high manufacturing demands associated with fuel pumps, most aftermarket competitors regularly purchase from each other and repackage the goods for sale. Growth in the industry will come about through companies that leverage these relationships. Doing so requires a company to look beyond its own capabilities, to the industry's as a whole, the goal being, leveraging those capabilities to lower manufacturing and inventory costs.

If manufacturers can achieve stronger partnerships, they will acquire greater bargaining power against distributors and gain enhanced product coverage. Both of these factors are critical for manufacturers' aftermarket success.

Inventory management is another stumbling block for participants. As the number of vehicle models increases, so will the need for different kinds of fuel pumps. Apart from maintaining more stock, companies will also have to incur higher costs in the form of tooling and associated manufacturing expenses.

"In order to meet these requirements, companies will need to manage inventories more efficiently and innovatively," concludes Chen.

North American Fuel Pump Aftermarket is part of the Automotive Aftermarket subscription, and is an invaluable resource offering detailed analysis of both the electric and mechanical fuel pump segments, including the industry's competitive structure and distribution channels. Executive summaries and interviews are available to the press.

Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams to deliver market insights, create value, and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers, and support staff spans the globe with offices in every major country. North American Fuel Pump Aftermarket A542

Keywords in this release: Fuel pump aftermarket, electric fuel pump modules, price concessions, rising manufacturing costs, thinning profit margins, innovative alliances, enhanced product coverage, inventory management