Production Engine Remanufacturers Challenged
28 July 1998
Frost & Sullivan: Production Engine Remanufacturers Challenged by Installer Error and Improvements in OE Engines
MOUNTAIN VIEW, Calif., July 28 -- A production engine
remanufacturer (PER) remanufactures large quantities of engines, typically
through an assembly line process. A company that remanufactures 1,200 or more
engines annually is defined as a PER. The need for PERs arose during World
War II, when production of passenger cars was virtually eliminated. During
this time, hundreds of machine shops opened, and installers learned to rebuild
engines. These custom engine rebuilders were the forerunners of modern PERs.
According to strategic research conducted by Frost & Sullivan
(http://www.frost.com), U.S. Production Engine Remanufacturers' Market, the number of
PERs is declining due to closures and consolidation. About 115 PERs are
currently in operation in the U.S. In 1997, revenues for long block engine
assemblies totaled $1.2 billion.
Demand for remanufactured engines is increasing at a moderate pace, and
demand is being fueled by an aging and growing vehicle population, in addition
to rising new car prices. Larger PERs have experienced higher unit demand
growth than smaller companies. This growth is due to increased business with
auto makers and auto parts retailers.
The majority of PERs' revenue comes from the sale of long blocks. PER's
are abandoning the sale of short blocks, which are engines sold without
cylinder heads, in favor of long blocks, since the price differential between
the two products has decreased during the past 10 years. In fact, many PERs do
not offer short blocks for sale.
Because auto makers have introduced new engine designs, PERs have had to
invest extensively in training and equipment. Dual overhead cams and single
overhead cams engine designs are particularly hard for PERs to rebuild. Also,
OEMs are introducing new engine designs. However, installer error is the major
challenge for PERs, as it accounts for most of the returns PERs experience.
"Competition and pricing pressures are relatively low in this market
compared to other automotive aftermarket segments," says Frost & Sullivan
Analyst Dean Quock. The competitive factors for market participants are
quality, technology, distribution, core programs and price. In the next few
years, the success of a PER will depend on quality, efficiency and
distribution. Many large PERs are moving toward full-line offerings of
remanufactured engines, while smaller companies are concentrating their
resources on a few engine families.
Frost & Sullivan's study, U.S. Production Engine Remanufacturers' Market,
is the only report that covers this market. This study identifies the major
players, and it contains a figure that shows which PERs are authorized
remanufacturers for Ford, GM and Chrysler. Also included in this study are
revenue forecasts, market shares, technology and market trends, competitive
issues and strategies.
The companies participating in this market include: Aaron's Automotive
Product, AER Manufacturing, Inc., ASAP Motors & Part Systems, ATK Engines,
AutoZone, Inc., Beasley Manufacturing Inc., Bonded Motors, CARQUEST,
Consolidated Manufacturing/Four Star Engines, CSK Auto, Inc., Dealers
Manufacturing, Discount Auto Parts, Enginemasters, Federal-Mogul Corporation,
Fred Jones Companies, JASPER Engines and Transmissions, Marshall Engines,
Inc., Mendenhall Rebuilders, Midwest Engine Sales, National Automotive Parts
Association (NAPA), Production Engine Remanufacturers Association (PERA),
Precision Engine, RAM Remanufacturing and Distributing, Inc., Recon Automotive
Remanufacturers, Inc., Rising Sun Engines, Shreves Engine Rebuilders, SRC
Corp., Topline Automotive Engineering, VEGE-Motoren b.V., Yamato Engine
Specialists.
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 #5127-18 U.S. Engine Control Unit Aftermarket and
#5156-18 North American Import-Car Hard-Part Aftermarket, and to support
industry participants with customized consulting needs.
Visit Frost & Sullivan's web site: http://www.frost.com.
Report: 5121-18 Publication Date: July 1998 Price: $2950