Frost: N. American Steering System Hard Parts Aftermarket Experiences Modest Growth
March 4, 2008 // Published as a news service by IHS
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As a result of the introduction of new vehicles with variable chassis features, the North American steering system hard parts aftermarket continues to demonstrate modest growth, according to Frost & Sullivan.
Analysts said since steering parts perform multiple functions throughout a vehicle, the rise in the total number of steering parts exceeds the increase in the number of vehicle models.
This factor contributes significantly to the aftermarket's growth, as distributors must now stock more parts to meet demand.
Recent analysis from Frost & Sullivan of the North American steering system hard parts aftermarket found earned revenues of $387.5 million in 2006, with estimates to reach $416.1 million in 2013.
"Light trucks using recirculating-ball steering gears drive the sales of conventional steering parts," said Frost & Sullivan industry manager Avijit Ghosh. " Tie rods installed in new vehicle models are expected to ensure the growth of the aftermarket in the medium to long term."
With regard to the product segments, ball joints and tie rods represent the two largest segments of the steering system hard parts aftermarket, analysts said.
Despite nearly equal unit shipment sizes, ball joints hold a higher share of total revenues due to their higher cost. The unit shipment and revenue shares for both segments will likely increase gradually over the forecast period, as a result of declines in the idler/pitman arm and center/drag link market segments.
However, analysts said premium lines will gradually lose market share to economy line products. This loss stems from the low labor costs in Asian countries that enable manufacturers to inexpensively produce the most popular and fastest-moving part numbers for resale in the North American aftermarket.
Given the minimal difference in quality between North American premium parts and imported economy line parts, the aftermarket is less willing to pay the higher price for steering components manufactured in North America, analysts said.
"Furthermore, original equipment (OE) steering parts have consistently improved in durability and reliability over the past few years," said Ghosh. "This has lowered replacement rates, thereby resulting in lower aftermarket unit shipment demand."
North American manufacturers need to start actively supplying economy line products to mitigate the competition from Asian products. Manufacturers that offer a full line of chassis parts will have a better opportunity to sell products to large customers that have grown from consolidation. Analysts said success in this market requires comprehensive market coverage and supplying through key traditional and retail customers.
Source: Frost & Sullivan.