Understanding the Challenges and Characteristics of the Automotive Aftermarket Essential to Succeed

Business Wire, Sept 17, 2007

PALO ALTO, Calif. -- With the North American automotive aftermarket being so diverse in its offerings and revenues being limited due to the high competition in each individual segment, many companies are looking to move into catering different products to expand their business. However, participants require a keen understanding of the nature and characteristics of each segment of the aftermarket before they can implement this strategy successfully.

New analysis from Frost & Sullivan (www.automotive.frost.com), Strategic Guide to the North American Automotive Aftermarket, finds that this market earned revenues of $76.38 billion in 2006 and estimates this to reach $90.08 billion in 2013.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest Strategic Guide to the North American Automotive Aftermarket, then send an e-mail to Vanessa Quezada, Corporate Communications, at vanessa.quezada@frost.com with your full name, company name, title, telephone number and e-mail address. An overview will be sent to you via e-mail upon receipt of the above information.

"With the evolution of the aftermarket and expansion of offerings to maximize revenue generation, it has become extremely important for participants to devise an accurate strategy based on knowledge of the overall flow of the aftermarket, including automotive maintenance and collision repair," says Frost & Sullivan Industry Analyst Kyu-min Oh.

Overall, strong pricing pressure, vendor consolidation, distributor consolidation, parts proliferation and a shift in the allocation of business to two end-user groups, do-it-yourself (DIY) and do-it-for-me (DIFM) consumers, are some of the key trends prevailing in the aftermarket.

Rising raw material costs, including metals, glass, plastic, rubber and crude oil is another prevalent trend. Fuel prices have also escalated to such an extent that many participants at various distribution levels have been forced to either increase their prices or absorb the costs incurred due to higher shipping prices.

Additionally, with increasing imports of inexpensive products flooding the aftermarket, it has become critical to maintain an efficient inventory. Since consumers tend to buy such products directly from the supplier, the possibility of overstocking is significant and can pose a real challenge to companies, as the excess stock will have to be sold at throwaway prices later to clear the inventory.

"Aftermarket participants, in many cases, need to perform internal process evaluations and implement a strategy that is flexible enough to adapt to the daily changes taking place in the market," says Oh. "Aggressively marketing products and expanding market coverage is essential as is the ability to cope with the changes that expansion brings."

While the restraints and challenges are many, the North American automotive aftermarket nevertheless offers growth opportunities to participants with a strong brand image as well as those targeting specific customer groups. Brand development is a top priority, but efficient inventory management and lowering costs are also proving to be the key to successful sales.

Overall, revenues for the North American automotive aftermarket have grown between three and five percent annually during the past five years. Current economic and demographic trends indicate that this growth rate will continue from 2007 to 2013.

Strategic Guide to the North American Automotive Aftermarket offers an overview of the entire aftermarket as well as a detailed analysis of market drivers, restraints, competitive structure, trends, challenges, and opportunities. This research also includes a quantitative analysis of the automotive aftermarket and its distribution structure as well as revenue forecasts for the period 2003-2013. Interviews with the press are available.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective, and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit www.frost.com.

Strategic Guide to the North American Automotive Aftermarket

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