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Strategic Analysis of the North American Class 4-8 Truck Powertrain Systems Aftermarket
Frost & Sullivan, Sep 2009, Pages: 93
Trucks Produced during the Boom Time in 2004 to 2006 Poised to Enter the Replacement Phase, Driving Aftermarket Sales of Powertrain Systems
Truck sales in North America peaked in 2004 to 2006, creating a vast pool of class 4-8 trucks for the powertrain systems and components aftermarket from 2010 to 2015. The trucks produced or sold during 2004 and 2006 are entering their replacement phase and this throws up considerable prospects for the aftermarket. To make the most of the market potential, it is vital to gain consumer confidence. 'Consumer buying habits put special emphasis on robust customer service that can establish a long-term relationship based on trust, quality, and price,' says the analyst of this research. 'Remanufactured powertrain systems should also carry a warranty that is comparable to new components to gain consumers’ trust.'
The aftermarket will be helped along by the increase in the prices of raw materials, engine parts, and labor for producing sophisticated, longer-lasting powertrain systems, which will further result in an average hike in the price of the final unit. Remanufacturers need to place a minimum order quantity with suppliers so it is viable for both the supplier and buyer to conduct business in this intensely competitive market. Nevertheless, the nature of the vehicles makes it easier for the aftermarket participants to recoup costs. 'Class 8 trucks require big-bore engines since they are long/heavy-haul trucks and these engines are priced 30 percent to 50 percent higher than engines for Class 4-7 trucks,' notes the analyst. 'An increase in the number of Class 8 trucks in operation is expected to generate demand for these big-bore engines, driving up average prices.'
Despite these advantages, the remanufactured powertrain systems market felt the effects of the economic downturn, when truck operators reduced their maintenance expenditure. Trucks traveled less as the owners employed a rotation policy, wherein they plied one section of trucks and kept the other parked. They also deferred new purchases, lowering repair opportunities. However, once the economy rebounds, market prospects and prices are expected to travel northward. In fact, there is already enhanced demand for the more expensive, complete drop-in engines, which is widening participants’ profit margins. 'Diesel engines are more complex than gasoline and therefore, owner operators/fleets prefer complete or drop-in engines to long block as they do not want their trucks to remain tied up in service bays for long,' observes the analyst. 'Complete engines have integrated fuel systems, along with other necessary parts such as oil pans and valve covers, and are always ready to drop in.' Fleet operators are willing to pay the extra cost for such convenience, as it helps them ply more trucks.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Remanufactured engine
- Remanufactured transmission
- Clutch
This Frost & Sullivan research service titled Strategic Analysis of the North American Class 4-8 Truck Powertrain Systems Aftermarket provides industry challenges, drivers, restraints, market forecasts, and strategic conclusions. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: remanufactured engine, remanufactured transmission, and clutch.
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