Filter Aftermarket Manufacturers Forced to Change Strategies

9 November 1998
Frost & Sullivan: Severe Price Competition Forces Automotive Filter Aftermarket Manufacturers to Grow Through Differentiation Strategies
    MOUNTAIN VIEW, Calif., Nov. 9 -- The U.S. automotive filter
aftermarket is quite large, and price competition is fierce. Growth is slowing
and any gain in market share is difficult. Such intense competition is leading
some suppliers to focus on growth through differentiation, from technological
improvements to advances in distribution. As margins tighten, differentiation
strategies will become crucial to a company's success.
    According to strategic new research conducted by Frost & Sullivan
(http://www.frost.com), U.S. Automotive Filter Aftermarket, revenues for the total
market reached about $1.1 billion in 1997. The oil filter aftermarket
accounted for over 63 percent of the market that same year.
    Several technological advances have been made to the filter media, and
today filters are lasting longer than ever. Thicker and better quality
filtering material and high capacity material can now trap finer particles and
collect greater amounts of particles before replacement is needed. Although
these improvements will result in fewer future sales, manufacturers would be
wise to look into their research and development. The technology is already
hitting the market and those who fail to pursue this opportunity may suffer,
insists Frost & Sullivan Analyst Robin Salafia.
    Other opportunities can be found in environmentally-friendly filters,
which many manufacturers have not yet pursued. Environmental concerns are also
impacting filter retailers who are attempting to educate the consumer and
smooth their fears.
    Although the primary threat at the manufacturer level is price
competition, another important concern is that end-user markets are
experiencing a structural shift. The percentage of revenues generated from the
DIY customer segment is declining in relation to the professional installer
segment, says Salafia. Therefore, many retailers who have traditionally
catered to the DIY segment may need to begin focusing their efforts on the
professional installers segment.
    About 25 companies manufacture filters in the U.S. filter aftermarket, and
the leaders include large manufacturers with the ability to sell to both
end-user segments through multiple channels of distribution. The top five
companies generate 92 percent of the total revenues. Factors that have
contributed to their success include competitive pricing, brand loyalty and
product innovation.
    Frost & Sullivan's new study, U.S. Automotive Filter Aftermarket, is
divided into three filter segments:  oil, air and fuel. Provided in this study
are revenue forecasts, market shares, market and technology trends,
competitive issues and strategies.
    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 #5507-18 U.S. Consumer Survey on Vehicle Maintenance and Repairs,
and to support industry participants with customized consulting needs. Free
executive summaries of all Frost & Sullivan reports are available to the
press.
    Report: 5478-18 Publication Date: Nov. 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 the web site:  http://www.frost.com