Auto Service World
News   March 26, 2003   by Auto Service World

Rotating Electrical Market Suppliers Must Differentiate to Prosper

As increasing price pressures from auto parts distributors drive down profitability, new product lines and pricing strategies are providing participants with means to increase sales in the North American starter and alternator market and fend off offshore competition.
New analysis from Frost & Sullivan, titled the North American Automotive Starter and Alternator Aftermarket, reveals that the industry generated revenues totaling $1.30 billion U.S. in 2002. Total market revenues could reach $1.66 billion in 2009.
However, the growing price-negotiating power of retail distributors along with their consolidation process is leaving participants with a reduced and segmented customer base. Fewer customers mean harder competition and a greater need to differentiate.
“Participants have launched a number of differentiation initiatives in the past, which have been followed by competitors,” says Frost & Sullivan Industry Analyst Alfonso Corredor. “First came quality and ISO certification, then innovative warranties like lifetime, free tow, and other similar offerings.”
The entry of sophisticated products with higher price tags into the aftermarket is driving the average unit and the overall industry unit price. The trend is reinforced as diminishing demand pushes old starter and alternator models out of the aftermarket. Remanufacturers are striving to provide very high quality products and change the association of poor quality with remanufacturing.
Many original equipment manufacturers are foraying into the market through acquisitions and direct use of their manufacturing facilities for remanufacturing in low volumes. Larger lifecycles and consolidation in the distribution sector are increasing core availability, causing a drop in prices, reducing core values, and deducting core credits.
“Improving product offerings and reducing prices on popular parts will help domestic manufacturers fight off the competition from imported Taiwanese and Chinese products,” says Corredor.

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