Frost & Sullivan: Safety, Emissions Regs Ensure Steady Revenues for Aftermarket
June 14, 2012
The heavy-duty aftermarket industry has little to no fear, as the number of commercial vehicles in operation is expected to multiply from 6.5 million units in 2010 to 7.6 million units in 2017, according to a new analysis from industry research firm Frost & Sullivan.
The Strategic Analysis of North American Medium/Heavy-duty Commercial Vehicle Maintenance and Repair Market finds that the market for replacement parts will grow from $16 billion in 2010 to $22.8 billion in 2017 at a compound annual growth rate of 5.2%.
The past few years have been tough on the North American commercial vehicle repair and maintenance market, notes Frost & Sullivan The downturn compelled many fleet owners to defer major repairs and maintenance, causing a steep drop in demand for replacement parts.
As the economy slowly improves, both freight tonnage and average annual miles travelled are expected to increase for medium and heavy-duty trucks. At the same time, fleets will continue to be cautious about replacing their trucks, leading to greater component wear and tear in an aging truck population.
Apart from a rebounding economy, end-user concerns about lifecycle costs and tighter regulations regarding emissions, idling and safety are likely to stoke a revival in the commercial-vehicle aftermarket. With new government safety and emissions regulations such as Compliance, Safety, Accountability and the Environmental Protection Agency's 2010 emissions regulations in place, fleet operators will have to do their due diligence in maintaining their trucks.
"Components and services related to safety, fuel efficiency and emissions will keep the revenue streams flowing at a steady pace," says Frost & Sullivan Research Analyst Kumar Saha. "The North American CV aftermarket will show strong growth in services related to braking, aftertreatment, filtration and replacement tire parts."
As components grow more complex in nature, fleet operators will seek to outsource complicated services, leading to higher revenues for the repair market in the next six years, Frost & Sullivan predicts.
Whatever the growth scenario may be for the commercial vehicle aftermarket, the ability to undertake advanced repair, competitive pricing and quick turnaround times will set service providers apart in this intensely competitive market, they say.
The original equipment service channel has made significant strides in these areas and is poised to gain significant market shares in the future. Conversely, independent participants must strive to improve in the area of advanced diagnostics to maintain or expand their business in a tight economic climate. Aftermarket service providers have to reinforce their value proposition to stay competitive.
"With increasing verticalization of components and rising repair complexity, the OES channel has been successful in demonstrating their viability in the aftermarket," Saha says. "Independent participants that desire to catch up with the dealers will have their work cut out."