Auto aftermarket demand predicted to grow 6% annually

A study says global demand for automotive aftermarket products will advance more than 6% per year to $144 billion in the year 2005.

Gains will be driven by a rise in the number of light vehicles in use, continued maintenance and repair of older vehicles in the developing regions of the world and greater use of higher value automotive electronics.

Advances will generally slow on a worldwide level from previous rates of growth, due to better quality original equipment and replacement parts and significant price competition in some segments of the market. Gains will be more rapid in the developing regions of the world, which generally have a higher proportion of older vehicles than the mature, developed regions of North America, Western Europe and Japan.

These and other trends are presented in World Automotive Aftermarket, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

Mechanical and electrical products account for 55% of overall demand.

However, these are largely mature products which are subject to intense price competition. Nevertheless, the segment includes several fast growing items such as brake parts and fuel injectors.

The electrical products segment will benefit from continued demand for SLI batteries. The aftermarket for electronic products such as controls, modules, sound systems and components, navigation systems and security systems, will outpace demand in the more mature mechanical and electrical products segments. By 2005, the electronic products segment will provide a $33 billion aftermarket.

Approximately 3,000 firms manufacture automotive aftermarket products throughout the world. The US and Japan, alone, account for almost half the world’ s shipments, followed by Germany, France, Italy, the United Kingdom, Canada and Brazil.

Japan is by far the largest net exporting country, boasting net exports in excess of $8.5 billion in 2000. The major multinational components suppliers that dominate the business tend to be vertically integrated, serving both the original equipment manufacturer (OEM) and replacement products (aftermarket) segments.