If there can be any single identifying trend in terms of the automotive visibility aftermarket, it could be the decided shift towards new technologies and upgraded parts.
While the replacement rates associated with some new and improved parts have been troublesome for the aftermarket in general, and while this overarching problem is particularly applicable to visibility products like wipers and lighting, there are some serious avenues for sales and some unique opportunities associated with helping car owners see the road ahead.
Wiper Blade Aftermarket
Wiper blades should continue to be the major revenue generator in the wiper systems aftermarket, with fast advancing technology and increasingly better-informed consumers.
“Within the wiper systems aftermarket, demand for wiper blades and wiper motors is likely to increase as consumers continue to keep their vehicles longer,” says Frost & Sullivan industry analyst Sanjay Vasudevan. “The consequent increased need for repairs and replacements drives demand for wiper systems components.”
New analysis from Frost & Sullivan’s North American Wiper Systems Aftermarket report says that the market earned revenues of $477.0 million (U.S.) in 2005 and is projected to reach $731.6 million (U.S.) in 2012.
The diversity and escalating number of vehicles in North America necessitate keeping a wide variety of component part numbers in stock. Wiper blade part numbers have proliferated in order to provide comprehensive coverage of vehicles by make and model, with an extensive array of connection styles for wiper arms. This contributes to the overall rise in unit demand for wiper system components.
Rear wiper systems are also becoming more popular on newer models, driving unit shipment in this product category in the aftermarket.
“With parts proliferation, manufacturers should be able to supply the increasing number of stock-keeping-units (SKUs) and also promptly adapt to changing design and technologies,” says Vasudevan.
Manufacturers of wiper blades in North America are also introducing more innovative and easy-to-install products. One of the recent innovations is the silicone squeegee blade. Unlike traditional squeegee materials, these are more resistant to harsh weather conditions and are not as easily susceptible to wear and tear. Major industry participants claim that silicone blades can last up to four times longer than traditional rubber blades.
Also according to researchers, the most prominent introduction into the aftermarket is flat-blade or beam-blade technology, which is touted as the future of wiper blade designs and positioned as a premium offering.
In Canada, this product category has received a tremendous increase in consumer awareness as a result of a single retailer, Canadian Tire, inundating the airwaves with advertising on the product.
While the replacement interval remains an issue here, the selling points of the new products speak for themselves, and obviously represent an opportunity to educate and eventually upsell your customers. As increasingly innovative and integrated wiper blades enter the market, their popularity will grow, as they can be easily installed on vehicles originally equipped with traditional wiper blades using specific adapters.
This boosts the involvement of the do-it-yourself category of consumers, a group that can be easily forgotten by jobber stores.
Although the demand for wiper blades has increased considerably, cost competition poses a serious challenge. The increasing price of steel, the primary raw material for manufacturing wiper system components, has significantly contributed to this trend. Wiper motors, arms, and blades contain a high steel content. With windshields getting longer and larger, the average length of wiper arms and blades has expanded. Therefore, a hike in steel prices will cause a simultaneous rise in average prices.
Wiper refills are a cost-effective replacement option to blades for price-sensitive consumers. Since refills are sold in pairs, consumers benefit from changing both wiper blades at a much lower cost. However, with cheaper and easier-to-install wiper blades coming in from low-cost countries, some end users are looking to replace the entire wiper blade instead of just installing the refills.
Overseas competition is expected to increase in the wiper systems aftermarket, in keeping with something of a whole-car trend. As competition gets more intense, the top manufacturers will find it hard to compete on value lines, as will their respective wholesalers. To counter low-cost imports, some long-standing domestic manufacturers are positioning their products with product quality as the key proposition, targeting quality and brand-conscious consumers.
This seems likely to become the most desirable battleground for jobbers too, as the cost war takes its toll.
Lighting Growth and Change
The rising number of vehicle accidents, new product introductions, and an increase in the total vehicle population will drive growth for manufacturers of replacement lighting in the coming years.
Collision replacement will account for the majority of revenues in this market. However, manufacturers are also making gains selling accessory lighting and brighter bulbs to improve the safety of nighttime driving. This supports revenue growth in a mature industry where overall replacement rates are declining.
Frost & Sullivan reports that manufacturers of lighting components earned revenues of $964.1 million in 2004 (U.S.), and revenues are estimated to reach $1.3 billion (U.S.) by 2011. “Automotive lighting systems seem to be evolving away from incandescent and halogen bulbs to LEDs and HID lighting. It is happening slowly, but someday there will be no more light bulbs in cars and trucks,” says Frost & Sullivan research analyst Stephen Spivey. “This change will present opportunities for aftermarket manufacturers to introduce new lighting products that capture the imaginations of vehicle owners, and [that] set [them] apart from their competitors.”
Automakers are deploying LEDs and HID lighting in greater quantities as standard equipment on new vehicle models. Common for several years in the centre high-mounted stop light, LEDs are now found increasingly in taillights, turn signals, and in interior applications like dome lights and dashboard lights. Once reserved for high-end luxury cars, HID headlights are increasingly common on new car and truck models. The shift to LEDs and other lighting technologies will present strategic challenges for manufacturers of standard replacement parts, and by extension, jobbers. LEDs and HID bulbs have a much longer service life than traditional lighting sources, which could eliminate the need to replace lighting components for many vehicle owners. Manufacturers will need to make key investments in technology and new product development over the medium to long term in order to remain competitive, and jobbers will have to meet the customer wherever he may end up, be that in the replacement, upgrade, or customization niche.
“Upgrading production capacity to compete in LEDs will be vital to future aftermarket sales as the number of LEDs carried by new vehicles continues to rise and the number of standard bulbs carried by new vehicles continues to decline,” explains Spivey. “In addition, suppliers must understand how to use the LED platform to develop innovative products that cause people to want to replace their factory-installed LEDs with an aftermarket product. Without both of these capabilities, manufacturers of incandescent and halogen lighting will see their markets get smaller over time.”