MARKET What Your Market Will Bear: The Rising Cost of Hub Assemblies and Bearings Can be Your Friend, or Enemy

The hub assembly market, as with many component categories in today’s business climate, is transforming itself at an accelerated pace. Automakers are looking beyond in-house production, design, and development of advanced chassis systems that bring them in line with customer demands for improved vehicle safety, without losing focus on issues regarding suppliers, competitors, and regulations. “With the growth of the bearing segment we have seen an influx of suppliers selling offshore value line products that are less than a value,” says Neil Hogan, product manager at SKF. “Being able to copy something doesn’t make you a capable manufacturer.” What these market indicators point to is an increased responsibility on the part of the jobber to provide quality, reliable parts to the technician, and also to work on educating that installer as to the safety, economic, and down-the-road aspects of these parts. “I think that selling quality OE that has been made specifically for that vehicle is still the best way to go,” says Doug Curliss, sales manger for the aftermarket at Schaeffler Canada. “An OE part might cost more up front, but it’s made for that car, and more importantly, it’s going to fit properly the first time.”

Sales Ramifications

Chassis systems are used to improve everything from styling, noise levels, and energy loss to load-bearing capacity. Automakers often differentiate their products through these elements, thereby encouraging chassis companies to develop powerful and economic safety systems to stay competitive.

This trend, coupled with the passing of a regulation mandating electronic stability systems by 2011, can be expected to drive greater sophistication in chassis systems.

With the passing of strict legislation regarding vehicle and driver safety, the automobile industry is beginning to adopt electrical systems, along with mechanical ones, that minimize human intervention. Although both manufacturers and consumers have welcomed these regulations, these improved systems do not come cheap.

Manufacturers will have to spend heavily on obtaining patents and conducting research, apart from upgrading their manufacturing processes. The changes to design, development, and implementation, as well as the complexity of system integration, will also warrant huge investments. In terms of that advancing sensor technology and its added cost, Hogan says, “We have seen the evolution from a standard taper set on front wheel bearings to the new generation of hub assemblies. With this progression to hub assemblies comes an increase in repair cost.” According to manufacturers, the increasing price of hub assemblies has been both a good thing and a bad thing. “Price sensitivity is high in this category because of the increase in unit cost of a sealed hub assembly or sealed bearing,” says Wendell Hays, senior product manager, steering products, at Federal-Mogul. “However, performance expectations are also raised, so the consumer will likely be intolerant of problems. Inferior hub assemblies are notorious for problems related to ABS malfunction and premature bearing failure. Shop owners and technicians that are primarily concerned with customer satisfaction will not risk their reputation by using low quality products,” he adds. Curliss also points out some of the issues surrounding inferior parts, particularly in the age of complex highly engineered and integrated assemblies. “Installing the right part is going to save you time in terms of all of the sensor issues,” he says. “There have been a number of problems in the industry with some products not offering the right readings, and the last thing you want is a customer who has just spent $500 on a new assembly to have a light go on almost immediately.”

Fortunately, there are solid maintenance steps that can be identified to your installer customer that will both increase your chassis parts sales and, hopefully, prevent annoyed customers.

Safety

While some customers fail to see the overall safety implications of the hub assembly, manufacturers say that maintaining the overall integrity of the system and keeping it free of excessive dirt and water is critical to the operability of the vehicle’s inherent safety features.

“All wheel bearings and seals, regardless of technology, are safety products above all,” says Hays. “The parts you choose, therefore, represent your commitment to protecting the safety of your customers. This also includes the diagnostic and recommendation process–if there is any sign of wear (noise, grinding, etc.) related to the wheel bearings or hub assemblies, emphasize to the consumer how important it is to immediately perform the repair. Make sure the vehicle owner understands the potential risks associated with trying to ‘get a few more miles’ out of the current bearings/assemblies.” In terms of trying to convince a customer to shoulder the obviously sizeable cost of many hub assembly-related repairs, Hogan says if a value line has to be selected, jobbers need to stay vigilant, up to date, and know their stuff.

“Quality, safety, and customer satisfaction should be a top concern in choosing a value line product,” he says. “Jobbers, installers, and their customers should understand the difference in these products and what is the best choice–what sort of testing is done on this product and how does it compare to OE specifications?”

What’s next

The pace of change in this market segment has certainly been kicked up as of late. With active handling computer programs, ESP systems, rollover protection for SUVs, and even TPMS requirements, OE manufacturers say that the life of a “generation” is not nearly what it used to be.

“Generally, OEMs have been changing their hub assembly designs every three to four years,” says Hays. “This is much shorter than previous generations of bearing and seal technologies, which often were unchanged for more than a decade. As a result, stores must carry more SKUs to provide the coverage required for their market. Therefore, pro-active inventory management is critical to success in this category.”

Further technological advances are also expected to accelerate the rate of change, as many manufacturers are already close to integrating even more systems into their product. “There have been several advances in the wheel bearing and seals in the industry, and most advances evolve around the consolidation of components,” says Hogan. “One of the newest is the ABS ring built into the seal-on-wheel bearing and hub unit assemblies. Another is the consolidation of traction control and ABS electronics built into the hub assemblies, and on the horizon we see consolidation of CV shafts and hub assemblies as one complete unit.”