Motor oil, antifreeze, automatic transmission fluid and gear lubricants take much of the shelf space, but specialty performance chemicals are enjoying growth in stores not known for carrying automotive supplies.
Frost & Sullivan’s research on specialty performance chemicals includes a wide range of products – from brake and power steering fluids, gas treatments and fuel system cleaners to radiator flushes and de-icers. Last year, the North American aftermarket was worth an estimated $746 million at the manufacturer level, which balloons to approximately $2.1 billion at retail.
Revenues are growing at approximately 2.1 percent annually over the 2011-2017 period, swelling to $863 million at the manufacturer level – $2.3 billion at retail – at the end of the forecast.
Although growth rates are low, specialty performance chemicals remain one of the few service products that do-it-yourselfers can handle. As a result, it has attracted increased competition from mass merchants and discount retailers such as Dollar General, Family Dollar and, of course, Walmart.
These non-automotive retailers compete against auto parts retailers and traditional warehouse distributors on convenience and price. Representing about 15 percent of total U.S. and Canadian sales last year, this channel is growing at a faster rate than warehouse distribution, auto parts retailing and OES. As these merchants gain share, some are looking to consolidate the number of brands stocked to reduce costs and clear space for faster-growing products.
Recent sales by Honeywell Consumer Products Group and Clorox Co. of Prestone and STP, respectively, to private-equity firms are evidence of the competitive pressures facing specialty performance chemical suppliers in the aftermarket. Competitors must be able to take market share away from other companies to increase revenues in this category.
That requires suppliers to continuously develop new additives with enhanced performance features to differentiate themselves and create brand loyalty with consumers. Today’s performance chemical consumers are equally as interested in lowering their vehicle’s exhaust emissions as much as enhancing its fuel economy. And there are additional needs for specialized products addressing the corrosion and performance issues of alternative fuels such as ethanol.
The market has come a long way in the past 20 years, when performance chemicals were considered “snake oil” in many quarters. Recent advances in the chemistry of engine fluids have paved the way for companies to break the threat of a commoditized marketplace dominated by private labels. Growth rates are higher for companies selling outside North America.
In the absence of proprietary research and development that meets specific market needs, specialty performance chemical suppliers will need to find new sales channels for their products to grow sales and maintain market share. The next frontier may be home-improvement stores, such as Lowe’s and Home Depot, which sell many appearance products for the automotive aftermarket, but not engine performance chemicals.
Stephen Spivey is a program leader for Frost & Sullivan’s Automotive & Transportation research practice. He focuses on monitoring and analyzing emerging trends, technologies, and market behavior in the automotive aftermarket in the United States and Canada.
Motor oil, antifreeze, automatic transmission fluid and gear lubricants take much of the shelf space, but specialty performance chemicals are enjoying growth in stores not known for carrying automotive supplies.
Frost & Sullivan’s research on specialty performance chemicals includes a wide range of products – from brake and power steering fluids, gas treatments and fuel system cleaners to radiator flushes and de-icers. Last year, the North American aftermarket was worth an estimated $746 million at the manufacturer level, which balloons to approximately $2.1 billion at retail.
Revenues are growing at approximately 2.1 percent annually over the 2011-2017 period, swelling to $863 million at the manufacturer level – $2.3 billion at retail – at the end of the forecast.
Although growth rates are low, specialty performance chemicals remain one of the few service products that do-it-yourselfers can handle. As a result, it has attracted increased competition from mass merchants and discount retailers such as Dollar General, Family Dollar and, of course, Walmart.
These non-automotive retailers compete against auto parts retailers and traditional warehouse distributors on convenience and price. Representing about 15 percent of total U.S. and Canadian sales last year, this channel is growing at a faster rate than warehouse distribution, auto parts retailing and OES. As these merchants gain share, some are looking to consolidate the number of brands stocked to reduce costs and clear space for faster-growing products.
Recent sales by Honeywell Consumer Products Group and Clorox Co. of Prestone and STP, respectively, to private-equity firms are evidence of the competitive pressures facing specialty performance chemical suppliers in the aftermarket. Competitors must be able to take market share away from other companies to increase revenues in this category.
