---

Success In the Automotive Lighting Aftermarket

9 November 1999

Frost & Sullivan: Innovation and Miniature Lamps Illuminate Path to Success In the Automotive Lighting Aftermarket

    SAN ANTONIO, Nov. 8 -- Despite robust growth in new vehicle
sales, the North American automotive lighting aftermarket is facing declining
market revenues, largely due to production over capacity and distribution
consolidation.
    According to new strategic research conducted by Frost & Sullivan
(http://www.frost.com), North American Automotive Lighting Aftermarket, the
aftermarket has suffered from considerable price erosion in recent years,
causing revenues to level off at $226.9 million in 1998.
    Even with a four-percent increase in unit shipments over the past year,
encroaching commoditization is increasingly forcing manufacturers to compete
on the basis of price. The continued growth of imports adds to North American
manufactures' troubles. Additionally, automakers are adopting products with
greater longevity at the OEM level, striking a significant blow to the
aftermarket.
    "Although the North American market has struggled with price erosion, a
likely exit of one or more market participants in the coming years, may result
in slight price stabilization," says Frost & Sullivan analyst
Meenakshi Ganjoo.
    The aftermarket is also under tremendous pressure because of the ongoing
consolidation in the distribution channels, particularly the price-driven
retail channel. Consolidation in the distribution channels is expected to
continue, resulting in the emergence of fewer, but larger retail chains
enjoying tremendous buying leverage.
    Meanwhile, miniature lamps will continue to be the bright spot in the
automotive lighting aftermarket, experiencing growth in the medium- to
short-term. However, this market is also threatened by an increasing use of
longer-lasting lamps by auto manufacturers and growing imports.
    "Aftermarket manufacturers need to aggressively pursue innovations and new
technologies in order to gain advantage over their competitors, especially
highly price-competitive imports from Asia," says Ganjoo. "In a market that is
expected to experience shrinking unit demand in the long run, sophistication
of new technology will determine the manufacturers' potential to achieve
premium prices."
    Frost & Sullivan presents Market Engineering awards to companies making
positive contributions in the automotive lighting aftermarket. The 1999 Market
Engineering Distribution Strategy Award and 1999 Market Engineering Best
Website Award goes to Osram Sylvania, Inc. The 1999 Market Engineering Product
Diversification Award is presented to General Electric (GE) Company.
    Frost & Sullivan, an international marketing consulting company, monitors
the automotive lighting aftermarket for trends, measurements and suggests
strategies for success. This ongoing research is included as part of the
Aftermarket Subscription, and is used to support industry participants with
customized consulting needs.

    North American Automotive Lighting Aftermarket
    Report:  #7196-18    Date:  November 1999    Price:  $3,450