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North American Remanufactured Engines and Transmissions Aftermarket
Frost & Sullivan, Feb 2005
Remanufactured Engines and Transmission Units Losing Market Share to Salvage Part Segments
Remanufactured engines and transmissions offer cost-effective solutions to vehicle owners or installers for the major repairs that tend to occur after the expiry of the warranty period. However, the remanufactured market is facing stiff competition from the salvage market that has access to an increasing source of sparingly used engines and transmissions. North American safety regulations require new cars to have safety features such as mandatory dual air bags that increase the scrappage of lightly used vehicles. While remanufactured engines represent a mature market that is expected to decline eventually, the transmissions market is likely to see revenue growth. This is due to the expected increase in the number of replacement-age vehicles in use and the decreasing supply of qualified labor to repair transmissions.
This Frost & Sullivan research service provides an overview of and outlook for the North American remanufactured engines and transmissions aftermarket. The study provides detailed revenue forecasts by segments as well as market share analyses. This invaluable market information is essential for both large and small market participants seeking to position themselves for maximum return on investment.
Remanufacturing Vendors Have to Deal with Parts Proliferation
Both the foreign and the domestic automakers are continuously introducing new engine and transmission models. On account of the rapid changes being made to the existing engines and transmissions, the market is seeing a great deal of parts proliferation. This, in turn, increases the number of parts that remanufacturers need to develop and warehouse before shipment.
Further, the increasing durability of the original equipment (OE) engines and transmissions implies that the inventory waits longer before it is utilized to replace a failed unit, says the analyst of this research. The resulting drop in per part demand pushes up the costs of remanufacturing, inventory, distribution, and marketing.
Demand for Replacement Parts Expected to Rise due to Aging North American Vehicle Parc
Due to the strong sales of new vehicles between late 1990s and 2000, the number of prime replacement age vehicles in the market is set to increase in the coming years. This is expected to contribute to the revenues for the remanufactured engines and transmissions aftermarket, which is likely to increase with estimated manufacturer level sales of $3.69 billion in 2004. The age of the vehicle parc in the North American market is increasing and this factor is expected to drive replacement engine sales in the near to medium term, reiterates the analyst.
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