Aftertreatment components hold great attraction for commercial truck manufacturers, as they help them comply with the Environment Protection Agency (EPA) 2007 and 2010 regulations. The recent fuel-price volatility, availability of government tax credits and incentives, as well as higher environment consciousness are also stoking the growth of the retrofit market.
New analysis from Frost & Sullivan (automotive.frost.com), Market Analysis of the North American Class 4-8 Aftertreatment and Exhaust Aftermarket, finds that the market earned revenues of $271.2 million in 2008 and estimates this to reach $2.9 billion 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 Johanna Haynes, Corporate Communications, at johanna.haynes[.]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.
Conventional products such as exhaust pipes and gasoline catalytic converters will continue to be in demand as they are failure mode parts that must be replaced when damaged, for compliance with comprehensive emission limits.
"What is noteworthy is that the compliance with the EPA 2010 regulations will create new revenue streams due to the higher uptake of products and services such as DEF and DPF cleaning," says Frost & Sullivan Research Analyst Ratika Garg. "The increasing use of DOC and DPF, in combination with the selective catalyst reduction (SCR) technology will not just stretch the aftermarket's service, maintenance, and logistics infrastructure but also offer revenue growth opportunities."
DOCs and DPFs will gradually phase out certain exhaust components such as mufflers, which were traditionally used as silencers, and distributors will increasingly stock DOCs, DPFs, urea filters, and sensors.
With the introduction of new technologies, participants in the aftermarket will be compelled to develop the ability to efficiently service medium- and heavy-duty vehicles. Moreover, the increasing complexity of medium and heavy-duty vehicles will heat up competition between traditional aftermarket distributors and authorized dealers. This is because the latter will have easier access to manufacturers for all information and repair tools required for the maintenance of technologically advanced systems.
"In such a scenario, knowledge management and technician training will emerge as opportunities for proper distribution and service," notes Garg. "There will also be additional service and replacement opportunities, requiring aftermarket suppliers to develop long-term business plans and explore investment potential in services such as DEF refueling and DPF cleaning machines."
Survival in the after-treatment and exhaust aftermarket will also hinge on significant investment in supply logistics as well as training and knowledge management. As the aftertreatment and exhaust aftermarket presents numerable business opportunities, the challenge for all market participants is to remain proactive in order to gain the maximum in a growing market. Though this will require significant investment in supply logistics as well as training and knowledge management, the current economic slowdown coupled with lack of financing resources results in a lack of preparation that will likely restrict growth.
The economic decline and inadequate credit could hit the participants hard. Fleet owners are deferring the purchase of EPA 2010-compliant trucks and postponing retrofitting vehicles with new emission-reduction technologies. This is because currently, there are no regulations mandating the use of after-treatment technologies on old diesel trucks.
Also, the high cost of technologies and lack of nationwide incentives or a clear understanding of return on investment (ROI) on retrofit solutions restricts certain fleets from making the initial investment.
There is a need for concerted industry-wide partnerships to jumpstart the preparations and to gather expertise to efficiently service and maintain EPA 2010 compliant trucks. Effectively devised strategies, based on upcoming trends and market realities, will deliver higher chances of success in this emerging market. This is because even though there is a new and unique growth opportunity for the aftermarket, the pitfalls of poorly planned and strategies are highly irreversible.
As emission regulations necessitate the use of expensive after-treatment technologies, participants should focus on manufacturing advanced, low-priced products that have higher replacement rates. They should create recurring revenue streams by retaining customers through offers of value-added services, customer loyalty programs, and better customer relationships.
For long-term growth, they should look to gain expertise in sophisticated technologies, products, solutions, and processes to provide quick as well as low-cost service and maintenance for the new generation of EPA regulation-compliant trucks.
Market Analysis of the North American Class 4-8 Aftertreatment and Exhaust Aftermarket is part of the Automotive & Transportation Growth Partnership Services program, which also includes research in the following markets: market analysis of the North American exhaust components aftermarket, total North American aftermarket for selected fractional horsepower motors, North American heating, ventilating, and air-conditioning (HVAC) 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.
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Market Analysis of the North American Class 4-8 Aftertreatment and Exhaust Aftermarket / N690