Demand Growing for Premium Brake Pads

Rising average vehicle age, growing consumer demand for premium brake pads, and higher prices for new SKUs entering the aftermarket are helping to drive brake pad revenues up by 4.3% annually through 2019, according to a recent market analysis by Frost & Sullivan.
The Frost & Sullivan report on the North American brake pads and shoes aftermarket shows manufacturer-level brake pad sales across the United States and Canada reached approximately 89.2 million units, totalling more than $2.1 billion in revenue in 2013. Demand for premium pads continues to grow and to take share from lower-priced parts.
Pads in the “Good” segment (defined as those without a shim, the lowest grade of friction materials, and limited warranty) represented about 15% of manufacturer revenues in 2012. Premature replacement at 12,000 miles is causing demand for these products to drop sharply at the installer level, according to the report.
Pads in the “Better” segment (defined as those including a shim plus hardware and a higher grade of friction materials) represented about 43% of manufacturer revenues.
Pads in the “Best” segment (those that feature a moulded shim, platform-specific friction materials, and a limited lifetime warranty) made up 52% of manufacturer revenues.
The aftermarket has also done a good job of responding to changes at the OE level with products that properly replicate the fit, form, and function of original parts.
“We have gone from eight different lines down to two,” explains Kevin Fleury, sales director of Transbec. “We have streamlined our selection so we now have our Profusion line, which is our better line, and our Bremsen line, which is our best line. Both are ceramic and are quiet, low dusting, and provide great stopping power.”
Ceramic SKUs represented about 60% of total industry revenues in 2013, while semi-metallic parts made up 33%. Non-asbestos organic NAO pads made up 6%.
“Aftermarket service providers consider brake repair to be one of the most important areas of their business. They know that earning that first brake job on a late-model vehicle can lead to a long-term business relationship with the consumer and, as such, they understand how important it is to do the job right the first time,” explains Christopher Battershell, director, braking, North America, Federal-Mogul Vehicle Components Segment.
“Premium brake components are engineered to meet or exceed the quality and performance expectations of that consumer, and for the shop owner represent a smart investment in customer satisfaction and loyalty. Another factor driving the popularity of premium products is the increased emphasis on communicating the benefits of spending a few dollars more on a functionally superior part. Our own research has shown that when the distributor and/or service provider clearly communicates the value of a premium product, the consumer will most often choose premium,” adds Battershell.
“Technicians are moving into the ‘better’ and ‘best’ brake pad categories as they find the cheaper economy brake pads require premature replacement (usually with less than 20,000 kilometres on them). The higher grade pads provide better friction material, a noise dampening shim and all required hardware. The better category (or mid-grade) is the fastest growing category, at close to 50% of the market. Ceramic pads now represent close to 70% of brake sales,” says Dean Weber, vice-president of sales and marketing for Proforce Automotive in Toronto.
“The most important thing when qualifying a customer is to find out what they are looking for in a brake pad,” explains Fleury. “Is the customer looking for something that is going to stop or something that is just going to slow him down? Is he looking for something where noise is a factor? Is he looking at something where dust is an important factor?”
“Customers that look for the cheaper stuff do so because they don’t know any better, so they go to what they know, which is price. But if you can educate them why that price point is junk and why they really need to spend some more money for a proper product, you can, more often than not, make the sale,” says Mike Adema, manager of Jakes Auto Service in Georgetown, Ontario.
“Once you start talking to a customer about a certain product, whether it be oil or brakes, if you can portray to them that you know what you are talking about, it doesn’t take long to convince them to change over from the dark side. Going the cheap route not only hurts the customer; it really hurts everybody,” adds Adema.
Even though more and more vehicle owners are opting for premium replacement brake parts, the sheer volume of inferior brake products brought in by unscrupulous importers continues to muddy the waters as these vendors continue to take advantage of customers who buy on price alone and assume the quality is inherent in the product.
“The large metropolitan areas tend to suffer the most from the dumping of inferior brake pads,” explains Fleury. “For instance, take the GTA or Vancouver. You will find a lot more ‘importers of the week’ there: small operations that pop up like dandelions that are basically based out of the Pacific Rim and are able to import one or two containers of brake pads and flood the market. And, due to the fact there is no regulation when it comes to brake pads, it’s very easy to buy anything out there.
“These guys will always be there because there will always be someone who is going to be shopping for price. Most jobbers and technicians have experimented with inferior-quality entry-level pads, and the smart ones have realized that it can and will affect their business negatively,” adds Fleury.
“I think the issue is becoming less evident as we move forward towards legislation regarding eliminating copper in brake pads to comply with better brake legislation and ongoing stringent penalties for asbestos in brake pads. As a large percentage of product is coming in from Asia-Pacific countries, they have continued to improve the quality and manufacturing processes so we are seeing fewer inferior brake pads,” says Weber.
“Every day and in every product category, some consumers are making buying decisions without being fully informed of the potential drawbacks of those decisions. In the brake category, some consumers mistakenly believe that an entry-level product – which might have come from an unknown manufacturer – will serve their needs just as well as a premium part. It’s the responsibility of all us – industry associations, manufacturers, distributors, and service providers – to help the consumer make a fully informed decision based on the features and benefits of each product,” says Battershell.
“Understanding and communicating the features and benefits of a quality product is absolutely key. It’s up to the manufacturer to provide the necessary training materials and support to help educate the jobber employee, but it ultimately comes down to a commitment by the parts person to consistently and effectively explain why a high-quality product is the smart choice. There are significant differences between many entry-level and premium parts, and it’s in our industry’s best interest to recommend products and services that will help keep the consumer safe and offer the performance and reliability they need,” he adds.
So what is the answer to this dumping of inferior brake pads?
“Jobbers should offer a good, better, best product offering and appeal to as many technician customers as possible, and market the merits of their added values, such as fast delivery times, extended warranties, included abutment clips with the ceramic pads, strong coverage, and more,” says Weber.
“The answer is improved awareness a
nd communication. The Automotive Aftermarket Suppliers Association’s ‘Know Your Parts’ campaign has done a great job of raising awareness of quality concerns at the industry level, but it’s up to all of us to emphasize the point that simply purchasing and installing a part isn’t a solution in and of itself; you have to be certain that the product was designed and engineered specifically for your vehicle by a trusted, quality-focused supplier,” says Battershell.
“I think a quality standard is part of the answer. It will help to ensure that we have safe vehicles on the road, but will it cure all our problems? No, because there will always be a demand for cheap products. Price will always be a driving factor. In the Jobber News Shop Survey of 2013, shop owners were asked to identify various factors in their decision to make a jobber a first call, and number one was inventory, followed by the relationship with the jobber, and right up there in third place was price. So as the survey proved, price will always be a factor. It may not be number one but it will always be an influence on a purchase,” says Fleury.