With average vehicle age at an all-time high and consumer spending on maintenance growing at a steady pace, times are pretty good for most brakes suppliers in the automotive aftermarket. However, things are even better for those in the heavy-duty aftermarket.
Brake pads and shoes for Class 4-8 trucks will grow by 4.6 percent annually – from an estimated $267.5 million in manufacturer-level revenue this year to $342.5 million by 2020. Forecasts call for 5.9 million brake shoe sets and 1.1 million pad sets in 2014, with demand for pneumatic brake shoes far larger than hydraulic parts. By contrast, Frost & Sullivan has forecasted revenue growth for brake pads and shoes in the Class 1-3 light-duty vehicle segment at 4 percent annually over the same period.
Class 4-5 trucks are mostly equipped with hydraulic brakes, while those in Classes 7-8 tend to have pneumatic systems. Class 6 trucks are about evenly split between hydraulic and pneumatic brake systems. Almost 100 percent of Class 8 trucks are equipped with drum brakes, but in Classes 4-6, disc brakes are more common. However the large number of trucks in Class 8 – approximately 3.2 million, nearly half the 6.7 million for all of Class 4-8 – skews total market demand in favor of the largest vehicles.
Distribution channels in the Class 4-8 aftermarket are very different from the light-duty Class 1-3 segment. Original equipment service (OES), which only accounts for 12 percent to 15 percent of passenger car and light truck brake pad sales, captures about 40 percent of revenue in Class 4-8. Reason being, the installation of heavy-duty brakes is a more specialized job than it is for passenger cars , requiring a higher degree of training to perform. Also, there are very few retail outlets to support brake jobs for large truck, which drives more fleets back to dealerships for brakes maintenance.
Meritor ― formerly ArvinMeritor ― is the dominant market leader in Class 4-8 friction. The company divested itself of its light-duty automotive business during the 2008-2010 period to focus on higher growth opportunities in the commercial vehicle industry, including aftermarket components.
Similarly, the outlook is comparable for rotors and drums. Manufacturer-level revenue for Class 4-8 rotors and drums will rise from $728.0 million in 2014 to $887.5 million in 2019 ― a compound annual growth rate of 2.9 percent. Unit shipments will increase from 7.7 million to 8.7 million over the same period.
For passenger cars and light trucks, the revenue growth rate is 1.9 percent annually. Revenue will increase from $1.07 billion to $1.22 billion from 2014 to 2020, with unit shipments rising from 76.7 million to 87.6 million over the same period.
Strengthening safety regulations and aging vehicles will support growing demand for Class 4-8 truck brakes. Some fleets will have to enhance their maintenance practices to ensure compliance with stopping distance regulations. However, the growth outlook is currently hampered by the slow U.S. economic recovery. Assuming that gross domestic product growth rates increase in the coming years, demand for medium- and heavy-duty truck brakes could rise even higher as these vehicles spend more time on the roads delivering products to customers.
Stephen Spivey is the Program Manager for Frost & Sullivan’s Automotive & Transportation Global Aftermarket research practice. He focuses on monitoring and analyzing emerging trends, technologies and market behavior in the global automotive aftermarket. For more information on Frost & Sullivan’s Automotive & Transportation research and service, contact Jennifer Carson, Corporate Communications, at [email protected].
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