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Mountain View, CA, United States, 2009/05/07 - Low margins, commoditization, liquidity issues, bankruptcies, and budget cuts are the dominant themes in the North American heating, ventilating, and air-conditioning (HVAC) aftermarket scenario.
Intense competition dominates the landscape and domestic participants battle to sustain their market positions. Over the forecast, revenues will decline by a CAGR of 0.2 percent, though growth in certain segments will rebound the total HVAC market towards the very end of the forecast.
New analysis from Frost & Sullivan (automotive.frost.com), North American HVAC Components Aftermarket, finds that market earned revenues of over $974.8 million in 2008 and estimates this to decline to $959.8 million in 2015.
If you are interested in a virtual brochure, which provides a brief synopsis of the research and a table of contents, send an email to David Escalante, Corporate Communications, at david.escalante[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country. Upon receipt of the above information, a brochure will be sent to you by email.
“While compressors are expected to exert a downward pressure on prices in the North American HVAC aftermarket, other components such as radiators, condensers and heater cores, will be instrumental in offsetting the decline to some extent,” says Frost & Sullivan Research Analyst Ratika Garg. “This is primarily because competition is more intense in the case of compressors and the price of a remanufactured product is as competitive as a new, imported part.”
Radiators and condensers may make an early entry into the replacement market ahead of other HVAC components, as they are more prone to damage in the event of a collision. Every two years or after logging 30,000 miles, whichever comes first, the coolant used in radiators must be replaced, in order to prevent corrosion. As the economy lingers, vehicle owners have started to cut auto maintenance and service, therefore, radiators expect to see faster wear and tear and will require replacement.
Though vehicle air-conditioning and heating are not critical to the operation of the vehicle, the increasing average age of vehicles in North America fuels the growth in the aftermarket. The economic slowdown forces Americans to keep their vehicles longer on the roads instead of procuring new ones. This factor drives replacements, particularly in areas that have extreme weather conditions.
Taking into account the increasing commoditization and high availability of low-cost replacement parts, participants have no option but to absorb the costs of raw materials themselves and operate within tight margins.
“The North American aftermarket is flooded with low-cost, imported products; this is causing price pressures on domestic market participants and forcing them to cut prices, resulting in declining revenues,” explains Garg. “Additionally, the prevailing credit crisis is forcing a number of vendors to sell their inventories at prices much lower than the market rate, further shrinking revenues.”
Participants must identify newer ways to differentiate their offerings, and formulate a superior value proposition for customers. This will enable them to attach a premium to their product prices and help overcome competition.
Product differentiation must be achieved by introducing new features or value-added services. In addition, the ability to address customer needs within short turnaround times will promote the establishment of trust and loyalty. Offering higher discounts, improved service levels, easy cataloging, and real-time inventory systems will ensure business progression.
North American HVAC Components Aftermarket is part of the Automotive and Transportation Growth Partnership Services program which also includes research in the following markets: protect your assets: an analysis of the North American spray-on and drop-in bedliner market, market engineering analysis of the light commercial truck and van rack aftermarket, North American selected accessories aftermarket, and North American selected brake components 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.
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North American HVAC Components Aftermarket / N4C8