Engine Complexity Causing Shift From Rebuilding To Remanufacturing
22 February 1999
Frost & Sullivan: Engine Complexity Causing Shift From Rebuilding To Remanufacturing in Truck Engine Aftermarket
MOUNTAIN VIEW, Calif., Feb. 22 -- The aftermarket for truck
engines has shifted from machine shops and fleet maintenance operations that
rebuild engines to engine makers that remanufacture them. This has happened
both because the increasing complexity of engines has made rebuilding more
difficult, and defective engines are more likely to be returned to engine
makers due to longer warranties. This trend is expected to cause strong growth
in the remanufacturing segment.
According to new strategic research conducted by Frost & Sullivan
(http://www.frost.com), North American Class 6, 7 and 8 Truck Engine Aftermarket, the
market for remanufactured engines was estimated to be $94.1 million in 1998.
Unit shipment growth is expected to be strong from 1999 on, and it is
anticipated that price growth will be moderate.
An important issue that manufacturers are facing is emission regulations,
which are set to tighten in late 2002. As a result, prices of new engines are
expected to rise, causing owners to attempt to extend the lives of existing
engines and trucks. The Environmental Protection Agency had accused engine
makers of programming electronically controlled engines to meet emissions
requirements in the Federal Test Procedure, but to emit up to three times more
NOx in actual use than allowed. As part of the settlement reached in
October 1998, engine makers agreed to produce significantly cleaner engines
from October 2002 on, rather than from January 2004, as had been previously
required.
Particulates of diesel exhaust has been listed as a toxic air contaminant,
which is also likely to result in efforts to reduce emissions. The main impact
will probably be on the formulation of diesel fuel, but engine design may also
be affected. Other efforts to reduce exhaust emissions are aftertreatment of
exhaust, use of alternative fuels such as liquefied natural gas and ethanol,
and development of hybrid trucks that use both internal combustion engines and
electric motors.
Acquisition of cores is key to a remanufacturing operation, says the
author of this study. Although core brokers once controlled distribution of
cores, this is shifting to engine makers who are increasing their presence in
the engine aftermarket. Engine makers can charge higher prices because they
use their dealer networks and their reputations as OEMs as competitive
advantages.
Frost & Sullivan's new study, North American Class 6, 7 and 8 Truck Engine
Aftermarket, is divided into two segments: remanufactured engine aftermarket
and rebuild kit aftermarket. Unit shipment, average price and market estimates
are provided for the remanufactured engine aftermarket, but due to the
complexity of the market for rebuild kits, this segment is discussed
qualitatively. Also included are market shares, market and technology trends,
competitive issues and strategies.
The companies participating in this market include: AE Clevite Engine
Parts, Caterpillar Engine Systems, Caterpillar Inc., Cummins Engine Co. Inc.,
Detroit Diesel, The Engine Connection Inc., ESCO Industries, Federal Mogul
Corp., FP Diesel L.P., Franklin Power Products Inc., IPD -- Industrial Parts
Depot Inc., Mack Trucks Inc., Navistar International Transportation Corp.,
ProDiesel, Sequel Corp., Springfield Remanufacturing Co., Related Companies:
AMBAC International Corp., Clean Diesel Technologies Inc., Consolidated Core
Return Center, Con-Way Transportation Service, Dartco Transmission Sales &
Service Inc., Diesel Parts Co. of California, Downriver Mfg. Co., EnCore Inc.,
Florida Detroit Diesel Allison, Freightliner Corp., Hercules Engine Co.,
Kenworth Truck Co., Martin Machinery, Motor Power Inc., Nissan Diesel America
Inc., Oshkosh Truck Corp., PACAAR Inc., Peterbilt Motors Co., S & B Supply
Inc., Sterling Truck Corp., Tracom Inc., Truck & Equipment Parts Co., Western
Star Trucks, Fleet and Freight Transportation Companies, Arrow Trucking Co.,
City Delivery Service, Con-Way Western Express, Cornhusker Trux L.L.C., CRST
International, Dedicated Logistics Service Inc., FBE (Fleet Body Equipment),
Glen Moore Transport Inc., Heart Land Express, Melton Truck Lines Inc., Mendon
Leasing Corp., NPE Inc., Pollard Motor Co., Pottle's Transportation Inc.,
Roadway Express Inc., Roberts Express Inc., Rollings Leasing Corp.,
Southeastern Freight Lines Inc., Sunbelt Power Systems, System 55 Transport
Inc., Yellow Freight, Young Transportation, Industry Organizations, American
Trucking Association (ATA), Association of Diesel Specialists, Automotive
Engine Rebuilders Association (AERA), Council of Fleet Specialist, Engine
Manufacturers Association, Heavy Duty Manufacturers Association (MEMA), Heavy
Duty Representatives Association, Heavy Vehicle Maintenance Group, Industrial
Truck Association, International Truck Parts Association, Motor and Equipment
Manufacturers Assn., National Association of Fleet Administrators (NAFA),
National Engine Parts Manufacturers, National Truck Equipment Association,
Production Engine Remanufacturers Assoc., Remanufacturing Industry Council
International.
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 #5162-18 North American Class 6, 7 and 8 Truck OE
Powertrain Component Markets and #5121-18 U.S. Production Engine
Remanufacturers' (PERs') Market, and to support industry participants with
customized consulting needs.
Report: 5573-18 Pub. Date: Reissued Feb. 1999 Price: $2950