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Product Differentiation and Customer Service Crucial to Exhaust Aftermarket

5 May 1998

Product Differentiation and Customer Service Crucial for Survival in Exhaust System Parts Aftermarket 

    MOUNTAIN VIEW, Calif., May 5 -- Although the exhaust system
parts aftermarket has experienced little technological change, opportunities
still exist.  Driven by growth in the U.S. vehicle population, increasing
vehicle age, and stricter emissions controls, the exhaust parts aftermarket is
expected to experience slightly higher growth in 1999 and 2000.  In addition,
environmental agencies are increasing emissions pressures to reduce emissions.
    According to strategic research conducted by Frost & Sullivan
(http://www.frost.com), U.S. Exhaust System Parts Aftermarket, revenues reached
$932.6 million in 1997.  It is expected that catalytic converters will
continue to be the fastest growing segment in the aftermarket throughout the
forecast period (until 2004), with an estimated compound annual growth rate of
six percent per year.  Within this, the specialty performance market is
growing at a rate of 10 to 12 percent.
    The biggest opportunity for manufacturers is to educate vehicle owners
about the benefits of a well-maintained exhaust system.  These benefits
include enhanced fuel economy, increased horsepower, and improved overall
performance.  Other opportunities lie in penetrating the specialty performance
segment, especially in modification of the import and sport-utility vehicle
(SUV) segments.  However, growth in this market "is not enough to support the
large number of companies targeting the performance exhaust segment for future
growth because of the shrinking non-performance aftermarket," says Frost &
Sullivan Analyst David Yu.
    Product modification is becoming popular because companies can improve
their products without the high costs of making new products.  Technological
trends include improvement in raw materials, and improved performance,
appearance and noise reduction.
    The structure of the market is changing, due to industry consolidation. In
1997, over 80 percent of the market was held by four market leaders.  While
this can result in oligopolistic pricing, consolidating distribution channels
have been reducing manufacturers' bargaining leverage.  The challenges of
environmental regulations are forcing companies to comply with product quality
requirements, or go out of business.  Additionally, longer warranties are
curbing aftermarket business, and stainless steel parts are reducing the
replacement exhaust market.
    The leading exhaust parts aftermarket manufacturers have succeeded through
consolidation, product innovation, streamlining for efficiency, and customer
service.  It is crucial that companies satisfy customers while minimizing or
eliminating unnecessary supply chain costs.  Professional installers are
concerned about comebacks due to faulty products, shipment of incorrect parts,
or poor instructions, so companies are combining attractive modular packaging
with expert technical advice and training to generate repeat business and
improve customer relations.
    Frost & Sullivan's new study, U.S. Exhaust System Parts Aftermarket, is
segmented into three parts:  Exhaust pipes, catalytic converters, and
mufflers.  This report examines the total exhaust system parts aftermarket for
light trucks and passenger cars.  The specialty performance segment is
discussed within this framework at a subsegment level.  Included in the study
are revenue forecasts, market trends, competitive issues and strategies.  In
addition, the report describes the major market competitors, as well as some
of the strategies that these market leaders use.
    The companies participating in this market include:  Allied Manufacturing,
Angelus Plating Works, Ansa Automotive Parts Distributors, Inc., AP North
American Aftermarket Division, B & B Fabrication, Inc., Bassani Manufacturing,
Borla Performance Industries, Bosal USA, Inc., Car Sound Exhaust Systems,
Inc., Catco Catalytic Converters, Charlie Brown Catalytic, Cotaco Creek,
Dynaflex Products, Eastern Manufacturing, Inc., Edelbrock Corporation,
Flowmaster, Inc., FlowTech - The Performance Exhaust Company, GReddy
Performance Products, Inc., HKS USA, Inc., IMCO (International Muffler
Company), IPC/Huth, JKL Exhaust Systems, Inc., Jagco Industries, Inc., Jardine
Performance Exhaust, Jones Exhaust Systems, Inc., Maremont Exhaust Products,
Inc., Miller Catalyzer Corporation, OMCO, Inc., Pace Setter Exhaust Products,
Shuttleworth Exhaust Systems, Smith Brothers Catalytic Converters, Stainless
Works, SuperTrapp Industries, Inc. Kerker Exhaust Products, Tenneco
Automotive, Tri-D Industries, Inc., Tuff Tips Chrome Products, Related
Companies:  Arvin Industries, Inc., Atlantic Tube and Steel, Benteler
Automotive, Exhaust Productions, Inc., Hooker, Midas, Inc., Senior Flexonics,
Inc., T/D Performance Accessories, Tubex Manufacturing, Tube Products
Corporation, Uni-Seal Corporation, Walker Electronic Silencing, Inc.,
Distributors:  Acklands, Ltd., Advance Auto Parts, All-Pro/Bumper To Bumper,
APS, Inc., AutoZone, Beck/Arnley Worldparts Corporation, Bridgestone
Firestone, Inc., CARQUEST, Car-X Muffler and Brake, Chief Auto Parts, Discount
Auto Parts, Goodyear Tire & Rubber, Hi-Lo Automotive, Inc., Installer's
Service Warehouse (ISW), Kragen Auto Parts, Meineke Discount Mufflers, Midas
International Corporation, National Automotive Parts Association (NAPA), Noise
Cancellation Technologies, Inc., O'Reilly Automotive, PACCAR Automotive, Inc.,
Pep Boys, Strauss Discount Auto, Walker Electronic Silencing, Inc., Industry
Organizations:  American Automobile, Manufacturers Association (AAMA),
Automobile Parts and Accessories Association (APAA), Automotive Service
Industry Association (ASIA).
    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 #5766-18 North American OE Engine-Related Component
Markets, and #5300-18 North American Undercarriage Components Aftermarket, and
to support industry participants with customized consulting needs.  Free
executive summaries of all Frost & Sullivan reports are available to the
press.

    Report: 5777-18   Publication Date:  May 1998   Price: $2950

    For more information in the United States, please contact:
    Kathleen Cooney
    California
    650.237.4385
    650.903.0915 fax
    kcooney@frost.com
    or, visit our web site:  http://www.frost.com

SOURCE  Frost & Sullivan