Your Must-knows about Automotive Aftermarket

Your Must-knows about Automotive Aftermarket October 18, 2007

Posted by wenbi in : Auto Parts , trackback

ttnet.net - [2006/01/24]

The automobile aftermarket industry has full spectrum of coverage over all products and services related to light and heavy duty vehicles after they are purchased and run on the road, including replacement parts, accessories, lubricants, appearance products, service repairs as well as the tools and equipment necessary for maintenance. The overall automobile spare parts can be categorized into the initial market where parts and components manufacturers deliver to original equipment manufacturers (OEM) and their primary or secondary suppliers (tier-one and tier-two respectively), and the aftermarket where end-users purchase parts and accessories for repairs or replacements and improvements of their car. OEM parts are supplied by approved suppliers under their own brand name, known as tier suppliers, who encompass everything from plastic injection molders to metal foundries and forge shops. Tier suppliers are facing tough challenge to produce less expensive, higher quality parts and strengthen the competition and flexibility in adapting themselves to this highly competitive and ever-changing market.
The sales developments in the OEM market for parts and components follow developments in car sales quite closely.
Spare parts are indispensable to fundamental maintenance of the car while accessories are products not necessary for repair or maintenance, but to enhance the comfort and aesthetic of the car according to car-owner’s likes. Original Equipment parts, sometimes more complicated and sophisticate, like engine or transmission parts are made subject to authorization by original factories, not available within the non-original segment. Since there are no copyrights on component designs involved, non-original parts are usually mass-produced and have to be replaced somewhat frequently, such as tires, wiper blades, braking systems, lamps, fenders, exhausts and more. They are often lower in price than original ones because there is less design or innovative skills required for OEM parts suppliers than the availability of cheap labors and easy and non-expensive access to raw materials.

Today, spare parts suppliers not only manufacture parts but also a full range of assemblies that are integrated into a complete electronic control system in a car. The advance in technology will slow the pace of parts replacement due to better quality original equipment (OE) and replacement parts and significant price competition in many segments of the market.
Aftermarkets In Global View
Strong global demands for automotive aftermarket products are benefited from steady growth of the global vehicle sales and hereafter maintenance and repair of older vehicles and prevailing uses of automotive electronics. It is predicted that world demand for automotive aftermarket products will climbe 5% per year through 2007 to $144 billion. The growth rate tends to slow down on account of lasting improvement on the quality of Original Equipment and replacement parts, together with ongoing price-slashing combats among suppliers.
In U.S. ,the automotive aftermarket industry has one of the biggest employers, nearly 3.7 million jobs, which accounts for 2.6% of the Gross Domestic Product (GDP), 11th largest contributor to the GDP as the automotive industry is the largest domestic industrial manufacturing sector. The industry reaches $247.8 billion in annual sales, added with $60 billion in annual unperformed vehicle maintenance. U.S. aftermarket continues to boost thanks to more registered vehicles, more licensed drivers, more miles traveled and an aging of the vehicle fleet. The growth for 2005 was predicted 3.5% up from 2004.
Europe Union aftermarket is expected to grow from over £á 40 billion in 2004 to £á 50 billion in 2005. In EU, the biggest market is Germany as more than 3 million vehicles sold annually, followed by France, Italy, United Kingdom, and Spain. The German automobile parts industry is also the biggest in Europe, containing over 3,000 companies, with nearly 309,000 employees.
France is second largest auto parts market in EU region since France auto parts players possess lower-wage edge than Germany has but don’t discount the quality. They are largely benefited from up-and-coming outsourcing by domestic major carmakers and keep growing in recent years, especially on OEM basis. The size of auto parts market (mostly OEM) approximates £á 45 billion while aftermarket parts account for one fifth of the total sales, nearly £á 11 billion (£á 2.5 billion for OES parts; £á 2.5 billion for non-original parts).
China is the eighth biggest motor vehicle manufacturing nation and the third largest producer in Asia. Vehicle production will climb to 3.2 million units by 2005. By 2020, domestic demand is predicted to soar to 17.1 million passenger vehicles and 2.69 million freight vehicles. Boosted by rapid new light vehicle sales and a shift towards consumer purchasers, the aftermarket for automotive and farm vehicle parts in China is forecasted to grow 11.6% per year through 2007, and reaching US$1.8 billion. Meanwhile, the demands on farm vehicle market for aftermarket parts are estimated to jump over 9% per year to US$975 million in 2007. Rapidly rising incomes in China will allow for fast expansion in motor vehicle utilization rates, which will then speed up the growth of domestic aftermarket.