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Viewing report
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North American Lead Acid Battery Markets - Replacement Market Analysis
Frost & Sullivan, Nov 2004
Consolidation in Distribution Sector Increases Competition Amongst Vendors
The starting, lighting, and ignition (SLI) application segment of lead acid (LA) batteries is the largest revenue contributor to the North American replacement LA battery industry with steady growth rates. The SLI LA battery aftermarket segment is witnessing continuous consolidation among its entrenched distribution channels. This consolidation is expected to lead to fewer accounts in the aftermarket chain being responsible for a larger share of aftermarket battery sales, thereby creating intense competition among the manufacturers as they vie to cater to the demands of a core group of aftermarket vendors. End users are also expected to feel the impact of this trend on price points as the bargaining power of the channel increases due to growing market presence, warranty, and credit terms.
Economic Upswing Signifies Increased Market Growth for LA Batteries
Following the recent economic downturn, the North American economy is on the path of recovery and gradually pushing capital investment. Batteries installed in stationary and motive power applications in the early 1990s, when capital investment was at its peak, most likely need replacement as the performance life of LA batteries is limited. Segments such as telecommunications, data communications, and heavy-duty equipment are also expected to be lucrative sources of revenue for LA battery replacement. The improving telecommunication end-user segment is also pushing demand for SLA batteries, especially following the consolidation among the telecom carriers in terms of acquisitions or shared infrastructure.
The upswing witnessed in the industrial sector is also expected to spur the demand for replacement LA batteries as the industrial application end-user segment is a key contributor to the overall revenues generated, says the analyst of this research. This demand is likely to be high during the initial years of the forecast period and is expected to reduce to a medium impact level over the later years of this period.
Preference for SLI LA Batteries in Automotive Industry Spurs Demand
As a leading source of revenue in the aftermarket, the SLI automotive end-user segment has been favoring the use of LA batteries in most automobiles. As demand for SLI replacement LA batteries is dependent on the general economic scenario, the recent economic upswing is a positive sign.
Due to the increasing life span of automobiles and a lack of serious competition to the lead acid chemistry that caters to the automotive applications, this end-user segment is likely to hold on to its leadership position, observes the analyst. This mounting demand for SLI LA batteries is further augmented by the increasing number of vehicles in use.
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