The North American Class 1-8 filters aftermarket generated manufacturer-level revenue of $2.23 billion in 2013 and will grow by 3.4 percent annually over the 2014-2020 period, according to the latest research from Frost & Sullivan.
The research analyzes both the passenger car/light truck (Class 1-3) and commercial vehicle (Class 4-8) segments. Class 1-3 represented $1.41 billion in revenue while Class 4-8 was worth $815.4 million.
The growth forecast is particularly promising given the increased usage of synthetic lubricants and enhanced filtration media, which has lengthened the time between services and reduced overall replacement rates for most products.
Among the main findings:
· Total unit shipments will grow from 548.9 million to 597.8 million.
· Class 1 to 3 filters will grow faster than Class 4 to 8. Cabin air filters and air filters will drive growth in Class 1 to 3, while fuel/water separators and coolant filters grow the most in Class 4 to 8
· Mass merchants and e-retailers are the fastest growing distribution channel in the Class 1 to 3 aftermarket, while traditional warehouse distributors are best positioned to grow their share in Class 4 to 8
With unit shipments only increasing by 1.2 percent annually, most of the revenue growth comes from rising prices. Frost & Sullivan forecasts manufacturer-level prices to increase by 2.4 percent in Class 1 to 3 and by 1.8 percent in the commercial vehicle segment.
The increasing importance of technology is the main factor driving filter prices higher. While most observers may not regard filters as technologically advanced products, the fact is that changes in engine technologies, lubricants, emissions regulations and conditions of operation have ushered in a new era where synthetic and fine-fiber media are key differentiating factors. Turbocharged and selective catalytic reduction (SCR) engines are included in engine technologies that demand high-functioning filters.
The introduction of nanofiber technology in air filters, for example, along with fine fiber/melt-blown media on fuel filtration, will support increasing prices and revenue growth while raising the barriers to entry for new participants. Going forward, growing interest in emerging fuel systems including, compressed natural gas (CNG) and dimethyl ether (DME), will drive the next generation of advances in filter media.
The rising average age of vehicles and an increasing number of vehicles in operation will also support growth in the filters aftermarket. Vehicles continue to last longer than ever because of engineering improvements made over the last two decades, but older cars and trucks tend to require more maintenance than newer ones.
Forecasts for continued economic growth will also help the aftermarket, as vehicles spend more time on the road.
The outlook has been steadily improving since the 2008-2009 recession years, when vehicle owners deferred many routine maintenance services. However, manufacturers that can drive profits with a focus on premium products that give their brands a competitive advantage in the aftermarket will be the biggest winners in the Class 1-8 filters aftermarket.
Kumar Shobhit is a research analyst 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, contact Clarissa Castaneda, corporate communications, at [email protected].
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