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Uptake of Remanufactured Parts in the North American Automotive Industry Driven by Lower Prices - The large array of new, salvage and rebuilt parts has eroded the market for remanufactured engines, transmissions, clutches, CV driveaxles and fuel injectors
Uptake of Remanufactured Parts in the North American Automotive Industry Driven by Lower Prices

 

NewswireToday - /newswire/ - Palo Alto, CA, United States, 2008/04/01 - The large array of new, salvage and rebuilt parts has eroded the market for remanufactured engines, transmissions, clutches, CV driveaxles and fuel injectors.

   
 
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Remanufacturers of these products cannot recover their high production costs despite an increase in their prices. Recently, prices have assumed greater significance with an escalation in commoditization and threat from low-priced offshore products.

New analysis from Frost & Sullivan (automotive.frost.com), The Changing Face of the North American Automotive Remanufacturing Industry, finds that the market will generate significant revenue growth with the proliferation of products, continued demand for remanufactured engine control units and rack and pinion steering gears, rising popularity of higher priced technologically advanced products such as electric power steering (EPS) rack and pinion steering gears, and the rising popularity of higher priced diesel engines and automatic transmissions.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of The Changing Face of the North American Automotive Remanufacturing Industry, then send an email to Sara Villarruel, Corporate Communications, at sara.villarruel[.]frost.com, with the following information: your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by email.

Aftermarket participants may get a respite from the challenge posed by offshore products due to continued inconsistencies in metallurgical and heat treatments causing the parts to fail prematurely. Moreover, the longer delivery time for foreign parts and the technological improvement of domestic products will likely curb the threat from foreign products.

Despite the failing of offshore products, domestic participants cannot rest easy as end users will likely gravitate toward the original equipment service channel due to the lack of qualified technicians in the independent aftermarket. To stay afloat in such a challenging market, remanufacturers need to identify and meet market demand by competitively pricing the most needed stock keeping units (SKUs) and selling them in smaller batches.

Remanufacturers may also increase their revenues by better differentiating their products from new parts in their marketing efforts. For instance, remanufacturers could leverage their wide range of products, broader application coverage and the environmental benefits of the recycled parts.

Competitively priced, durable and reliable parts for older and later model vehicles have helped remanufacturers cement their position in product categories such as engine control units (ECUs) and rack and pinion steering gears. Future technological advancements will enable aftermarket participants to increase their market presence in additional product categories.

"Due to the rising influence of mechatronics, remanufacturers are investing heavily in R&D to deliver products on time while also identifying the parts and technologies that will drive future growth," says Frost & Sullivan Industry Manager Avijit Ghosh.

Remanufacturers must also begin building electric power steering (EPS) rack and pinions, as their installation rates have increased in newer vehicle models. However, hydraulic power steering (HPS) rack and pinions will continue to account for the majority of aftermarket sales.

Meanwhile, the aftermarket for diesel engines will likely outpace the gasoline engine aftermarket. The North American diesel engine market has considerable room for growth given that only 2 to 3 percent of the region's vehicles came equipped with diesel engines in 2006. This opportunity to increase the diesel vehicle population will generate replacement opportunities in North America.

"Remanufactured ECUs will continue to dominate replacement demand in the aftermarket due to the large price difference between new and remanufactured ECUs," notes Ghosh. "Remanufactured ECUs are priced in the $40 to $150 range, while new ECUs may cost $600 to $800."

The remanufactured market will likely phase out manual transmissions due to the growing dominance of automatic transmissions at the OE level. This trend will drive demand for remanufactured automatic transmissions in the aftermarket.

During the next five to seven years, remanufactured starters and alternators will become prominent aftermarket products due to their lower price point and competitive warranties.

The Changing Face of the North American Automotive Remanufacturing Industry is part of the Automotive & Transportation Growth Partnership Service program, which also includes research in the following markets: North American remanufactured engine and transmission aftermarket, North American steering system hard parts aftermarket, and North American starters and alternators aftermarket. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.

Frost & Sullivan, the Global Growth Consulting Company, partners with clients to accelerate their growth. The company's Growth Partnership Services, Growth Consulting and Career Best Practices empower clients to create a growth focused culture that generates, evaluates and implements effective growth strategies. Frost & Sullivan employs over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 30 offices on six continents.

The Changing Face of the North American Automotive Remanufacturing Industry N0B9

 
 
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Uptake of Remanufactured Parts in the North American Automotive Industry Driven by Lower Prices

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Frost & Sullivan |
Publisher Contact: Sara Villarruel 
210.477.8448 sara.villarruel[.]frost.com
 
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