As the expiration of tire pressure sensors installed since the 2007 U.S. TREAD Act merges with European legislation mandating tire pressure monitoring systems (TPMS) as standard equipment for all new vehicles sold in the EU27 region, TPMS replacement demand is expected to triple by 2018-2020. Frost and Sullivan expects the total market to grow from $121.1 million last year to $365.5 million in 2020, a compound annual growth rate of 17 percent.
Battery expiration will be the main demand driver in North America, while winter tire sales will have the largest impact in Europe. In 2014, unit shipments totaled approximately 7.8 million for North America and 1.4 million for Europe.
However, extended battery life could emerge as a demand restraint. The first generation of sensors is forecasted to expire after seven to eight years of service, and is just now entering the aftermarket after TPMS became mandatory under the TREAD Act in 2007. But they are lasting in excess of 10 years on some TPMS platforms. Longer sensor battery life will defer more replacements beyond the 2015–2020 forecast period.
Revenue growth will be higher in Europe than in North America because the European market is less mature. However, direct TPMS-equipped vehicles will enter the aftermarket in significantly larger numbers in both regions over the forecast period, driving both unit shipments and revenue higher.
Manufacturer-level prices were approximately $18 per unit in North America last year and around $26 in Europe. Prices will decrease in the coming years as demand increases and more programmable, universal fit sensors become available as aftermarket parts.
Currently, most cars are being serviced at automobile dealerships in the OES channel as TPMS sensors are relatively new in the market and customers tend to rely more on the OES dealerships for installing the TPMS sensors. As replacement rates increase, more tire shops, WDs and retailers will begin to carry them, with independent garages servicing more TPMS systems.
As the market becomes competitive, Frost and Sullivan expects market participants to consolidate, in order to attain economies of scale and expedite the learning curve. Recently, Netherlands based sensors and controls manufacturer Sensata Technologies acquired Schrader International, which is estimated to have a market share of 55 percent. The oligopolistic market comprises of five main direct TPMS producers that supply to the OEMs for automotive and commercial applications.
Therefore, the TPMS market is predicted to undergo changes in the form of mergers and acquisitions in the wake of a potential market size expansion. Despite the growing threat that more automakers will adopt “indirect” TPMS, which does not include tire pressure sensors, direct TPMS currently represents about 75 percent of the TPMS market in Europe and 84 percent in North America.
In order for this high growth potential to materialize, installers must convince consumers to replace the sensors when they expire. This is most likely to happen when the vehicle’s tires are replaced.
With such high growth potential, manufacturers, distributors and installers, should work together to educate consumers about the safety benefits of TPMS.
Editor’s note: Oindrila Bhar is a Research Analyst for Frost & Sullivan’s Automotive & Transportation Global Aftermarket research practice. She 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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