Brake market revenues switching
Staff -- Purchasing, 1/12/2006 2:00:00 AM
A recent report from market researcher Frost & Sullivan shows difficult years for manufacturers and suppliers of hydraulic components—at least until friction-ready calipers reach saturation in the aftermarket, when revenues will rise again, leaving the long-term outlook positive. The report reveals that revenue in the aftermarket hydraulic brakes market totaled $385.1 million in 2004 and is forecast to slide to $360.7 million in 2011.
However, revenues in this market are shifting as much as declining. Repackagers of hydraulic components are becoming major suppliers of replacement parts for their assembly and packaging services. Rebuilders and manufacturers are producing smaller components that are assembled into whole calipers or master cylinders by the repackager, which are then sold through traditional aftermarket channels. This helps offset the rising cost and declining demand factors that make competition in this market increasingly difficult. "Although manufacturers are seeing a decline in their revenues, rebuilders and repackagers are profiting," explains Frost & Sullivan analyst Stephen Spivey. By salvaging the core and replacing worn parts, wheel cylinders can often be repaired or remanufactured instead of being replaced with a brand new component. Hence, rebuilders are able to furnish products at a lower price than manufacturers of brand new products, thereby capturing a significant portion of aftermarket revenues for calipers and master cylinders. "Over the long term, it will remain hard for manufacturers and distributors in the North American hydraulic brake system parts aftermarket to compete only in hydraulic parts," says Spivey. "They will need to diversify into other product lines as well as partner with repackagers to assemble components at a lower cost."
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