CAFE Standards Boosting Driveline Parts Sales

The auto industry has seen a significant technology shift in recent years towards electronic and mechatronic components, with a clearly defined move away from torque transfer to torque management. It’s all part of the push for improved fuel economy and reduced emissions, as OEs strive to meet tough CAFE (Corporate Average Fuel Economy) standards for better fuel efficiency.
The proliferation of more sophisticated transmissions and transaxles and the rising popularity of all-wheel drive, four-wheel drive, and on-demand drive systems means that simply put, there are more parts wearing out. While four-wheel-drive pickups have been around forever, the growing use of AWD systems and on-demand systems on SUVs and passenger cars offers a significant opportunity in increased parts sales in this category.
For example, the market for CV axles is moving towards new and away from remanufactured axles. “I would say that in the next five years or less, there will be no reman in this market segment,” says AIT Automotive Canada Inc. president Gordon King.
“We got out of the [remanufactured] CV axle business back in the ’90s,” adds Jerry Friesen, general manager of Pat’s Driveline in Alberta. “Now there are very few guys doing any axle rebuilding. When you look at the cost to assemble and the cleaning and the parts required, you can now buy a brand-new one made in China for the cost of an hour’s labour.”
Advanced Innovative Technology Corp., manufacturer of TrakMotive and SurTrack automotive, truck, and ATV/UTV aftermarket performance axles, recently opened a new 20,000-square-foot warehouse and distribution centre in Mississauga, Ontario.
“We are able to produce new CV axles at about the same cost as a remanufactured axle. CV axles are fairly heavy and costly to ship, so it’s not practical or cost-effective to ship a used axle back for credit. Now you can get a new axle that’s clean and you don’t have to ship back the core – so there is less handling for the distributor. It’s a much cleaner way to do business and the cost to the consumer is about the same – and it comes with a warranty,” explains King.
“With OEs changing models so often, the availability of new CV axles is one of the strengths of this market. For example, our product line has 1400 SKUs covering 25,000 applications, and everything is re-engineered. When a new axle comes out, it is purchased and sent away to be re-engineered, and once the warranty period is up we will have it on our shelf. This takes about six months to happen,” explains King. “We just added 100 new SKUs, and we will continue to add probably 200 to 300 new SKUs a year. As the new ones come out, we will have them on the shelves so there is no need for rebuilders any more.”
However, as the purchase price of some newer vehicle models come down, and the inherent cost of drivetrain repairs go up due to advances in technology and design, some of these newer, low-cost vehicles are experiencing a shorter life span.
You really have to know what you are doing these days,” says Salvatore (Sal) Gennaro, transmission specialist and owner of HighTech Transmissions in Markham, Ontario. “I recently invested in a new scanner, because the old one just couldn’t cut it anymore. A lot of these newer low-cost vehicles are becoming like razor blades – you use them a couple times, then throw them in the garbage,” says Gennaro. “For example, I’m seeing a lot of CVT transmissions on very inexpensive cars now. These transmissions are expensive to replace, so five years down the road when the vehicle is out of warranty and its value has dropped, rather than make the repair, owners will more often than not choose to drop it at a dealership and get a new vehicle,” he explains.
Due to mounting regulatory pressures aimed at reducing CO2 emissions, OEMs and suppliers are investing in advanced technologies that reduce weight and boost efficiency. The extra weight of components such as a transfer case, extra differential, or constant velocity joint result in increased fuel consumption. To overcome these weight and efficiency challenges, OEMs are increasingly incorporating more electronics and on-demand systems.
“Imports are influencing domestic model designs more and more. With the trend towards global manufacturing of vehicles, the designs are strongly influenced by the way the Europeans are making things. Lightweight vehicles require lightweight parts, and OEs are leaning on the import vehicle designs to get to their CAFE requirements,” explains Friesen.
“In this specialized world now, jobbers need to carry all the sensors and shift solenoids and pressure controls for all imports, which now account for about 15% of this business today. Two decades ago, electronics didn’t account for even 2% of the business. I expect to see the use of electronics continue to grow,” adds Gennaro.
With a growing number of performance vehicles on the road, rear-wheel drive has made a bit of a comeback. However, it’s no longer the traditional style of driveline from the ’70s. It’s more European in design, and being able to just change out a U-joint is no longer possible. When there is a failure, vehicle owners now must replace the entire drive shaft. Furthermore, drivelines are now designed to be much lighter and very precise, with a lot less mass to reduce weight and increase fuel efficiency.
“I think we still have some longevity issues with some North American-made parts. For instance, if you take a look at a Ford or GM vehicle where they have tried to replicate what is done in Germany or Japan, they are just not there yet,” says Friesen. “I drive a Toyota FJ Cruiser made in Japan, and on the driveshaft it uses the same U-joints that the old FJ 40s did in the ’70s, and they last forever. You take a Toyota Tacoma with the exact same drivetrain, but that vehicle is assembled in the U.S., and it uses a different driveline and that driveline won’t last a third as long as the one in my FJ Cruiser. It’s not that it is an inferior product; it’s just that the Japanese designs are that much further advanced,” explains Friesen.
In the majority of late-model vehicles on the road today, the driveline is an integrated system that requires input from MAP sensors and a multitude of other functions in order to determine what gear to be in, when to upshift, when to downshift, and when to respond when there is a heavier load or demand for power. Where those functions used to be mechanical or purely hydraulic, they are now mostly electronically controlled, with a solenoid or a series of solenoids giving the signal to shift. When these drivelines fail it can translate into some pretty healthy sales numbers, given the number of components now involved in the system.
As long as OEMs continue to strive for improvements in traction and fuel economy, you can rest assured that these vehicles will make their way into independent repair shops for driveline service on a regular basis. And it’s a good bet that many will be in sooner rather than later.