Growth in Demand for Replacement Brake System Parts

PALO ALTO, Calif., Oct. 11, 2005; Growth in the United States and Canadian vehicle populations are sustaining the demand for replacement brake system parts. Demand for brake pads, rotors, and calipers are particularly strong since all new vehicles are equipped with at least two, and possibly four, wheel disc brakes.

In 2004, the average age of vehicles in the two countries was 8.68 years and continues to rise. This bodes well for the North American brake system parts aftermarket since older vehicles require constant preventive maintenance when compared to newer models.

New analysis from Frost & Sullivan (http://www.transportation.frost.com ) reveals that revenue in the Total North American Brake System Parts Aftermarket totaled $2.21 billion in 2004 and is forecasted to reach $2.84 billion in 2011.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of the Total North American Brake System Parts Aftermarket, then send an e-mail to Tolu Babalola, Corporate Communications at tolu.babalola@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country. We will send you the brochure via email upon receipt of the above information.

In the face of increased competition, North American brake parts manufacturers are producing higher quality components that have a longer service life. While this offers them greater opportunities in servicing the lucrative niche markets, it also helps them tap the growing demand for premium brake parts. For example, unit shipments of premium brake pads are growing at a much higher rate than the overall brake pad aftermarket. Likewise, sales of premium rotors are expected to surpass those of low-cost rotors in the medium to long term.

However, rising raw material costs and increased competition from overseas suppliers has served to make the production of brake components more difficult for North American manufacturers. While the increase in oil prices, steel, and other components has added to production costs, manufacturers are hesitant to raise their prices, as it would make them less competitive against the foreign competitors that are at an advantage due to their lower overseas labor costs.

In addressing this cost disadvantage, North American manufacturers need to look at developing strategic partnerships with foreign producers. Also, converting some manufacturing operations to remanufacturing or repackaging operations by sourcing components from overseas and assembling them within their facility could help in ensuring their price competitiveness.

"As remanufactured brake system components find greater acceptance in production lines, independent rebuilders are profiting from remanufacturing or rebuilding used brake system parts and selling them back to the aftermarket," explains Frost & Sullivan Research Analyst Stephen Spivey. "Remanufactured calipers, brake shoes, and master cylinders typically cost half the price of new components and their sales outweigh those of new parts, thus providing greater margins."

While demand for disc-brake components remains high, there is a decline in demand for drum brakes due to the decrease in population of vehicles using them. However, this is likely to change in the short to medium term as automakers return to incorporating rear drum brakes in certain vehicle models, causing a boost in demand over the long term for brake components across all part categories.

"Brake pads and rotors are the most commonly replaced parts in the aftermarket and they accounted for a combined revenue share of 74.9 percent in 2004," says Spivey. "While price remains a key competitive factor, aftermarket brake system parts suppliers also need to work toward gaining the installers trust and loyalty by designing products and services that meet their needs."

Total North American Brake System Parts Aftermarket is part of the Automotive Aftermarket subscription. The study has been segmented into friction parts, hydraulic parts, and rotors and drums and includes detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Executive summaries and analyst interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit http://www.frost.com .