Strong Growth Opportunities Exists for Automotive Aftermarket in Densely Populated Developing Countries, According to New Report by Global Industry Analysts, Inc.

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GIA announces the release of a comprehensive global report on the Automotive Aftermarket markets. Global automotive aftermarket is projected to reach US$375 billion by the year 2017, supported largely by strong growth in developing countries. Increasing vehicle population, higher vehicle life expectancy and longer car retention in these countries, in comparison with their developed counterparts, will remain growth drivers in the world market.

Automotive Aftermarket: A Global Strategic Business Report

Follow us on LinkedIn – Defined as secondary market available after the sales of the original equipment, the automotive aftermarket comprises accessories, replacement parts, appearance products, and lubricants, among others. Players in the marketplace include independent companies, manufacturer/OEM owned dealers, and manufacturer-authorized dealers. The number of company-owned outlets is on the rise as automakers increasingly try to harness the profit potential in aftermarket by aiming at increased retention of their post-warranty clients. The DIFM (do-it-for-me) sector captures more than 75% of the market largely because of the increasing complexity in service and repair mechanisms of newer vehicles.

The automotive industry in Europe is overcast with the deepening European sovereign debt crisis and the accompanying economic uncertainties. OEMs in the region stand exposed to the risks of a Eurozone slowdown, with the clampdown on spending, budget cuts and credit likely to soften new car sales in the region. In other words, higher cost of borrowing as a result of region-wide fiscal contraction with new 'austerity budgets' is slowing down economic activity. However, the 2007-2009 recession inspired adoption of leaner inventory holding strategies and restructured cost bases now has the automotive industry in the region better equipped to weather a possible Eurozone slowdown. The emerging signs of softening new car sales in the region is expected to actually support demand for aftermarket car upgrades, given that business opportunities in this industry is dependent upon consumers ability to finance upgrades on existing cars rather than purchase new cars.

A major fallout of the 2007-2009 recession and the current economic uncertainties plaguing the developed US and European economies in the form of downgrades of sovereign debt and fears of escalating contagion in the euro zone debt crisis, is the accelerated shift in emphasis on the automotive industry in developing countries. The growing clout of developing countries like China and India in terms of production and consumption of automobiles now stands pronounced as market growth shifts distinctly towards developing countries.

While US and Europe remain saddled with daunting financial issues, such as, mounting and unsustainable national debt levels, unprecedented changes in government regulatory/fiscal policies, and volatile consumer spending, rapidly expanding number of car ownership in developing countries bodes well for the future of the auto aftermarket.

Another noteworthy trend is the extended life of original equipment engines and transmissions. With OEMs focusing on manufacturing vehicle parts and components of the highest quality, there has been a rise in the average operating life of most automobile components. This increase in component durability and quality, in effect, delays the need for replacements, since superior quality automotive parts require lesser repair, replacement and refurbishment during their operating life. This trend is more evident with engine and transmission manufacturers, who are fast producing durable and superior quality engines and transmissions, thereby lengthening the replacement cycle for Original Equipment (OE) engines and transmissions. This delay in the need for replacements proves to be a major challenge for players in automotive aftermarket industry as it hinders the unit shipment and value sales for remanufactured engine and transmissions aftermarket, which represent major product market segments in the aftermarket industry.

Against this backdrop, automotive electronics such as night-vision devices, global positioning systems (GPS) and reverse and parking-assist systems will become popular targets for market expansion in the aftermarket. Growing percentage of electronic content in automobiles coupled with modern consumers’ proclivity to in-car infotainment technologies, provides ample opportunities for growth.

Dynamics of business opportunities for automobile entertainment systems in the aftermarket differs among the product markets in sync with the pace of the technology development in each of the segments. For instance, the importance of car audio/music systems in the aftermarket is gradually reducing, given the increase in OEM/factory fittings of the same. A large percentage of new vehicle models come equipped with fully integrated systems with full compatibility to most popular audio file formats, iPODs, and storage devices, typically used by the average consumer. This thereby reduces the need to retrofit or upgrade a factory fitted unit with an aftermarket system. However, in contrast, in-car navigation and information systems have a higher appeal in the aftermarket as factory fitted satellite navigation systems have product cycles that lag behind technology development in the aftermarket.

As focus of automakers continues to shift towards next generation fuel efficient, alternative powertrain technologies, players in the aftermarket will need to be technologically prepared for changes. The rapid of pace of depreciation in the value of factory-fitted systems will continue to result in skewing consumer preferences towards aftermarket products. Investments in R&D and production processes are therefore seen as critical for sustained success in the marketplace.

As stated by the new market research report on Automotive Aftermarket, United States and Europe together dominate the world market. Asia-Pacific represents the fastest growing regional market with a projected 6.3% growth over the analysis period. The increasing number of cars on the road each year in this region directly translates into mounting replacement demand for auto components. Automotive aftermarket for electrical products is projected grow at the fastest rate of 3.9% over the analysis period. In the upcoming years, aftermarket in North America will witness increased demand for accessories that meet customers’ desire for comfort and appearance i.e. custom seats, mats, hands-free phone kits, bluetooth car kits, and auto-repair tools. In Europe, on the other hand, product solutions that enhance the performance and agility features of vehicles, such as, steel-belted radial tires will witness the highest adoption. Specialty aftermarket equipment/accessories, especially those that are environmentally friendly will witness the highest gains.

Major players in the marketplace include ACDElco, American Axle & Manufacturing Holdings, ASIMCO, Bridgestone Corp., Continental AG, Delphi Automotive LLP, Denso Corp., Federal-Mogul Corporation, Honeywell International Inc., Johnson Controls, Lear Corp., Magna International, Magneti Marelli SpA, Michelin, Robert Bosch GmbH, TRW Automotive, and Visteon Corp., among others.

The research report titled “Automotive Aftermarket: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of market trends, issues, drivers, company profiles, mergers, acquisitions and other strategic industry activities. The report provides market estimates and projections for key regional markets such as the United States, Europe and others, alongside upcoming markets such as Asia-Pacific and Latin America. Product segments analyzed include Mechanical Products, Electrical Products, Electronic Products, Exterior and Structural Products, Motor Oil, Fluids and Additives, and Appearance Chemicals.

For more details about this comprehensive market research report, please visit –

About Global Industry Analysts, Inc.
Global Industry Analysts, Inc., (GIA) is a leading publisher of off-the-shelf market research. Founded in 1987, the company currently employs over 800 people worldwide. Annually, GIA publishes more than 1300 full-scale research reports and analyzes 40,000+ market and technology trends while monitoring more than 126,000 Companies worldwide. Serving over 9500 clients in 27 countries, GIA is recognized today, as one of the world's largest and reputed market research firms.

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