Frost & Sullivan: Brake System Parts Aftermarket Picks up Speed
26 July 1999
Frost & Sullivan: Brake System Parts Aftermarket Picks up Speed
MOUNTAIN VIEW, Calif., July 26 -- The gradual increase of
average vehicle prices is creating consumer awareness for safety-related
parts. The general population is becoming more educated about the variety of
choices they have, forcing manufacturers to differentiate their products or
suffer profit erosion. Meanwhile, larger manufacturers continue to
consolidate to acquire strong brands and penetrate new markets.
According to research conducted by Frost & Sullivan (http://www.frost.com), the
U.S. Brake System Parts Aftermarket reported revenues totaling $2 billion in
1998. This growth is attributed to higher prices, which are a result of
higher costs of raw materials and labor as well as the use of higher-quality
materials to improve performance. Although the brake system parts aftermarket
accounts for the largest share of revenues of all undercar aftermarket
segments (including ride control, exhaust, drivetrain, and steering and
suspension systems) this market is growing at a hindered pace.
Among the factors predicted to boost aftermarket unit demand is the aging
vehicle population. As the useful lives of vehicles are extended, the average
service life per vehicle also increases. Price and quality remain the two
most significant competitive factors in the market. Price sensitivity has
intensified as the power of buying groups continues to grow. Revenues are
projected to reach $3 billion by 2005. The friction parts aftermarket
hydraulic parts aftermarket and the drum and rotor aftermarket are also
included in this total revenue projection.
About 200 companies supply parts to the U.S. brake parts aftermarket.
Leaders in this industry are large manufacturers who have access to the four
main channels of distribution including program distributors, retailers and
new-car dealers. Smaller companies are helplessly forced out of business as
large conglomerates continue to grow. Smaller manufacturers in the market
tend to follow trends set by market leaders in order to stay in business.
There is a trend of industry consolidation that is also changing the
structure of the market. The aftermarket has mutated into an oligopoly, where
few major companies control most of the market and have limited power to
influence pricing. However, declining prices of brake system parts will
eventually flatten out as the market leaders strengthen their influence on the
brake system parts aftermarket and further reduce industry overcapacity.
The U.S. brake parts industry is experiencing extremely slow growth.
Finding new facets of the market or niche segments is becoming increasingly
difficult. Demand is higher from customers as well, as their knowledge of
other options present themselves. As a result, brand marketing has become a
primary means of competition. "While availability, timely delivery and
technical support are still major competitive factors, effective brand
management and customer satisfaction are the keys to success in the brake
system parts aftermarket" says Frost & Sullivan Analyst, David Yu.
Market participants include: ABC Brake Company, General Motors Service
Parts Operations, Automotive Caliper Exchange Inc., Accu Industries Inc,
Airtex Products/Automotive Division, Akebono America Inc., AlliedSignal,
Autoline Industries Inc., Autospecialty SBC Limited, Brake Headquarters USA
Inc., Brembo North America, Cardone Industries, Coni-Seal, Dana
Corporation/Distribution Services Division, Dana Corporation/Brake and Chassis
Division, Federal-Mogul Corporation, Hawkhead Automotive Inc., Midwest Brake
Rebuilders, Performance Friction Corp., Qualitee International, Satisfied
Brake Products, Superior Friction Inc and Universal Brake Products (UBP).
Frost & Sullivan presents Market Engineering Awards to companies that have
made a positive contribution to the automotive industry.
The 1999 Market Engineering Competitive Strategy Award is given to Dana
Corporation for remaining the leader in the brake system parts aftermarket
through a highly diversified portfolio. Its many independent brands have
enabled the company to continue its growth in a mature marketplace. With
exceptional brand management, Data Corporation has successfully enhanced brand
equity, improved product mix and increased profitability.
The 1999 Market Engineering Product Line Strategy Award is Universal Brake
Parts (UBP) for making substantial gains by targeting the price sensitive
end-user segment, which often opts for the maximum value regardless of brand.
Through a strategic mix of product features, UBP has successfully met these
demands.
Frost & Sullivan is an international marketing consulting and training
company that monitors the automotive industry for market trends, market
measurements and strategies. This ongoing research is utilized to update a
series of subscriptions including the Automotive Aftermarket Custom
Subscription (http://www.frost.com/online) and to support industry participants with
customized consulting needs.
Visit Frost & Sullivan's Web site at: http://www.frost.com/.
U.S. Brake System Parts Aftermarket
Report: 5911-18 Date: June, 1999 Price: $3,450