Consolidation Forces Auto Battery Market to Refocus
11 September 1998
Industrywide Consolidation Forcing Automotive Battery Aftermarket Manufacturers to Refocus Strategies
Mountain View, California -- Growth in the automotive battery aftermarket is steady, due to a persistent need for replacement batteries. However, the perception of batteries as a commodity product is posing a marketing challenge for manufacturers, who must now focus their efforts on diversifying their product lines and maintaining favorable relationships with suppliers.
According to strategic new research conducted by Frost & Sullivan (www.frost.com), U.S. Automotive Battery Aftermarket, growth is stable but slow. Approximately 59.9 million batteries were sold in 1997, and revenues amounted to nearly $1.9 billion.
Growth in the vehicle population, coupled with the increasing average age of the vehicle population and increasing average miles driven per vehicle are the primary market drivers. Increasing parasitic loads, higher underhood operating temperatures and more vehicle inspection programs also contribute to growth in the battery aftermarket.
The growing popularity of light trucks is causing demand for light truck batteries to shoot up. Opportunities are also arising for higher priced batteries with reserve capacity and longer warranties, because they offer higher profit margins to manufacturers.
Automotive batteries are sold through almost all aftermarket distribution channels because they are so easy to install, and very few parts cover a large proportion of the vehicle population. Distribution channels include mass merchandisers, auto parts retailers, battery specialists, traditional distribution, original equipment service and national installer chains. However, the trend toward consolidation of distributors is rapidly becoming the main threat to market players.
"The massive consolidation among distributors of batteries increases the bargaining power of distributors in relation to manufacturers and reduces battery demand. Advance Auto Parts is about to merge with Sears' Western Auto/Parts America division. This newly expanded 1,500+ store retailer is simply not going to order as many batteries as in years past when Advance and Western Auto were separate competitors. The new entity's distribution centers and stores will be consolidated wherever there is redundancy, and battery inventories will be reduced as a result. This reduction in orders will be tough on battery manufacturers during the next 10 years," asserts Frost & Sullivan Analyst Dean Quock. Currently, about 12 manufacturers sell batteries to the aftermarket, and the market is dominated by only four large domestic manufacturers.
Battery designs have not changed dramatically, although they now carry heavier loads and operate in tougher conditions, says Quock. Computer Aided Design and Manufacturing is the only technology trend expected to play an important role in the aftermarket during the forecast period 1998 to 2004. Electric vehicles, thin-metal technology batteries and increased voltage batteries are not expected to have a significant effect on the market during the forecast period.
Frost & Sullivan's new study, U.S. Automotive Battery Aftermarket, provides revenue forecasts, technology trends, market drivers and restraints, competitive issues and strategies. In addition, the report includes an independent market share assessment of all the major competitors, and a breakdown of the market into six distribution channels, with predictions through the year 2000.
This automotive industry research has integrated the Market Engineering consulting philosophy into the entire research process. Critical phases of this research include: Identification of industry challenges, market engineering measurements, strategic recommendations, planning and market monitoring. All of the vital elements of this system help market participants navigate successfully through the automotive battery aftermarket.
Frost & Sullivan is an international marketing consulting company that monitors the automotive industry for market trends, market measurements and strategies. This ongoing research is utilized to update a series of research publications such as U.S. Automotive Spark Plug Aftermarket, and #5156-18 North American Import-Car Hard-Part Aftermarket, and to support industry participants with customized consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.
Click here to see Frost and Sullivan's Executive Summary of their United States Battery Aftermarket report.
Report: 5718-18 Publication Date: August 1998 Price: $2950
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