From 2011 to 2014, prices have been dropping substantially as consumers increase spending on new vehicles and move away from low-cost alternatives
Los Angeles, CA (PRWEB) December 19, 2014
Engine rebuilding and remanufacturing services have a buyer power score of 3.1 out of 5, indicating that buyers have a slight advantage over suppliers in regard to pricing and negotiating leverage. The engine rebuilding market runs counter-cyclically to the economy as a whole. “With the economy improving steadily, sales of money-saving services such as engine rebuilding have been losing ground in favor of purchasing new vehicles,” according to IBISWorld business research analyst, Scott Winters. As sales slide, negotiating leverage is transferred from suppliers to buyers, resulting in falling prices and higher value purchases. The increasing popularity of substitutes such as new vehicles or new engines has also put considerable downward pressure on prices. Buyers can use substitutes as a powerful negotiating tool, gaining discounts on engine rebuilding services. A highly fragmented market consisting of hundreds of small, local suppliers leads to high competition and more buyer choice, again boosting buyer negotiation power. Comparing price quotes from local and national vendors can be an invaluable asset to buyers, especially considering the pricing model used by engine remanufacturers that can introduce unexpected costs. Finally, low switching costs prevent buyers from being locked into a purchase for an extended period, affording them more negotiating power and lower risk when choosing a new supplier.
On the other hand, the need for each engine to be evaluated on an individual basis and assigned a customized machining service significantly increases costs and lead time. A moderate lead time can lead to more lost revenue for buyers in the form of equipment downtime. Transportation costs are also high when purchasing engine rebuilding services, potentially hurting buyer power. “More importantly, demand for engine rebuilding and remanufacturing services is forecast to recover in the next three years as consumer spending slows down,” says Winters. A boost in sales will cause prices to rise significantly in the three years to 2017 and hinder buyer power. Therefore, it is advised that buyers procure these services soon to avoid anticipated price increases. Major vendors include Cummins Inc. and JASPER Engines and Transmissions. For more information, visit IBISWorld’s Engine Rebuilding and Remanufacturing Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of engine rebuilding and remanufacturing services. Suppliers take engines apart, clean and lubricate components, make any necessary modifications and replace any worn out parts to return the engine to an efficient and functioning state. Engine rebuilding is the process of hiring a supplier to remove, remanufacture and reinstall a vehicle's engine, as opposed to replacing a vehicle's engine with a rebuilt unit. This report focuses specifically on automobile engines and excludes engines for motorcycles, off-road vehicles or boats. This report does not include general engine maintenance and repairs.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain &amp; Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.