Research and Markets: Effective Core Programs that Cut Core Investment of Distributors Fuel Growth in the North American Automotive Remanufactured Aftermarket

DUBLIN--Research and Markets(http://www.researchandmarkets.com/research/96da42/evaluation_of_core) has announced the addition of Frost & Sullivan's new report "Evaluation of Core Strategies in the North American Automotive Remanufactured Aftermarket" to their offering.

“The most popular core program is the traditional core transaction program in which different core prices are set for different part numbers.”

Participants in the North American automotive remanufactured aftermarket are striving to reduce distributors' core investment without hurting profitability. With distributors becoming larger due to industry consolidation, remanufacturers had to negotiate with them to reduce core investment to keep the remanufacturing market alive. Distributors generally have pricing agreements with their respective manufacturers on a part number basis because they will obtain that price from the customer. Such strategies are deployed to minimize their overall core investment. "Remanufacturers' customized core programs for reducing its distributor's core investment differ by remanufacturer and their respective individual customers," notes the analyst of this research service. "The most popular core program is the traditional core transaction program in which different core prices are set for different part numbers." Some of the other popular core programs practiced in the core market include flat core pricing strategy, core consignment program, and coreless programs.

Industry participants adopt a no fault return policy by which all cores are accepted and full credits are issued notwithstanding the condition of the core. For instance, Ford will take back the core even if it is disassembled and torn apart. This move has provided the company significant competitive advantage. If the core received from a customer cannot be subject to remanufacture, it is scrapped but the customer receives full credit. Ford does not hold the customer responsible for cores returned in poor shape. Instead, specialists are deployed to improve the condition of the cores for the future. In this manner, customer satisfaction is greatly enhanced and the core return rate accelerates.

The transition from remanufactured to new parts in certain categories is challenging the sale of remanufactured parts. The constant velocity (CV) drive axel category has transitioned to the new faster than any other category. Water pumps, compressors, and brake master cylinders are other categories that are rapidly shifting towards the new. The remanufacturer bills the distributor for cores that are in its inventory and as the transition to the new takes place, the remanufacturer falls short of cash to write off all the core credits. "As the industry progresses from remanufactured to new, it causes a cash flow burden for the remanufacturer," says the analyst. "This raises a concern in the minds of distributors if that particular remanufacturer is a participant in multiple remanufactured product categories." It severely impacts the stronger remanufactured categories such as power steering pumps, rack and pinion steering, engine control units (ECUs), and starters and alternators.

Industry participants must pay particular attention to remanufactured product categories that have maintained their market share and are expected to remain steady within its respective market segment in the future. Among the categories that need special emphasis are power steering pumps, rack and pinion steering gears, and ECUs. These products are more complex and it is fairly expensive to forge a casting, making remanufacturing a highly economical option. The remanufactured ECU segment is expected to comprise more than 90 percent of ECU market in the medium to long term due the advantage of cost effectiveness.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

Engine cores
Transmission cores
Starter and alternator cores
Engine control unit cores
Steering parts

This Frost & Sullivan research service titled Evaluation of Core Strategies in the North American Automotive Remanufactured Aftermarket analyses industry challenges, core policies of major remanufacturers, core programs, core price trends, and industry best practices. In this research, Frost & Sullivan's expert analysts thoroughly examine the markets for the following: engine cores, transmission cores, starter and alternator cores, engine control unit cores, and steering part cores.

Key Topics Covered:

Automotive Remanufactured Industry Overview
Automotive Remanufactured Aftermarket Overview
Core Strategies in the North American Selected Automotive Remanufactured Aftermarket Segments
Engine Core Market
Transmission Core Market
Starter and Alternator Core Market
Engine Control Unit Core Market
Steering Parts Core Market
Other Core Markets
Core Market Findings
Appendix

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