Frost & Sullivan Executive Summary:
U.S. Automotive Battery Aftermarket
11 September 1998
Introduction and Definition: The United States Battery Aftermarket
This report focuses on the aftermarket for lead acid batteries for passenger cars and light trucks. Replacement demand generated by all vehicles--cars, pickup trucks, sport utility vehicles, vans, and minivans--with a gross vehicle weight rating of 14,000 pounds or less is included.
The United States automotive battery aftermarket is large and mature. Revenues are estimated to have been $1.89 billion in 1997, when approximately 59.9 million batteries were sold. Growth is steady but slow in both unit shipments and average price. Chapter 3 presents estimates of unit shipments, average prices, and revenues for the 1994-1997 historic period and projections for the 1998-2004 forecast period.
A battery is a nondiscretionary item necessary for the operation of a vehicle. Being easy to install, between one-third and one-half of all automotive batteries are purchased by do-it-yourselfers (DIYers).
Approximately 12 manufacturers sell automotive batteries to the U.S. aftermarket. Four large domestic manufacturers dominate this market:
- Johnson Controls Inc.
- Exide
- Delphi Automotive Systems
- GNB Technologies
Other manufacturers include Acumuladores Mexicanos, Douglas Battery Manufacturing, East Penn Manufacturing, Crown Battery Manufacturing Company, Optima Batteries, Superior Battery Manufacturing Company, Inc., Twin Power USA, and Wrangler NW Power Products Inc.
Chapter 3 presents estimates of market shares.
Industry Development
Automotive batteries have been around for as long as the automobile itself. Exide Corporation was actually founded by Thomas Edison in 1888, although it was years later when Exide actually produced the first automotive battery.
The number of battery manufacturers operating in the United States has slowly decreased over the years as companies closed or consolidated.
Because batteries are fast-moving, easy-to-install items, they are sold through almost all aftermarket distribution channels. Coverage requirements are low, meaning that relatively few part numbers cover a large proportion of the vehicle population.
Major Market and Technology Trends
Technology Trends
Battery designs have not changed dramatically, but batteries now carry heavier loads and operate in tougher conditions. Few changes in battery design are expected for the forecast period.
Electric vehicles are unlikely to have an impact on the U.S. automotive battery aftermarket during the forecast period of 1998 through 2004. Nor are thin-metal technology batteries and increased voltage batteries expected to have a significant effect on the market during the forecast period.
Market Trends
Unit Shipments and Revenues
Unit shipments and revenues are affected by a host of market drivers and restraints. The major ones are:
- Drivers:
- Growth in the vehicle population
- Increasing average age of the vehicle population
- Increasing average miles driven per vehicle
- Increasing parasitic loads
- Higher underhood operating temperatures
- More vehicle inspection programs
- Restraints:
- Consolidation of distributors
- Reduction in pipeline fill
- Vendor price competition
- Better original-equipment battery quality
The weather can be either a driver or a restraint. Extreme heat and cold shorten battery life, while mild weather prolongs battery life. Since the severity of summers and winters over the forecast period cannot be foreseen, it is not know whether the weather will be primarily a driver or a restraint.
Price
Prices are measured at the warehouse distributor (WD) acquisition level. The average price of an automotive battery is estimated to have been $31.52 in 1997. Prices for automotive batteries increased slowly during the 1990s, although the average 1998 price actually decreased slightly from 1997. Prices are expected to rise slowly over the forecast period.
Distribution
Distribution channels for aftermarket batteries (in descending order by revenues, beginning with the largest) are:
- Mass merchandisers
- Auto parts retailers
- Battery specialists
- Traditional distribution
- Original equipment service
- National installer chains and other
More detailed breakdowns containing percentages can be found in Chapter 4 of this report.
Major Competitive Factors
The major competitive factors in this market are:
- Quality
- Technology
- Distribution
- Core programs
- Price
Conclusions
The aftermarket for automotive batteries is large, but with only a limited number of participants. Although market growth is steady and the need for replacement batteries will persist, manufacturers must work to diversify their product lines and to maintain favorable relationships with suppliers. Market participants should also consider the effects developing technology will have on this industry over the next 10 to 20 years in formulating their business plans.