The increasing number of prime replacement age vehicles, combined with technological improvement and increasing cost of raw materials and labor, will drive revenues of the total aftermarket for remanufactured engines and transmissions. The salvage market provides used engines and transmissions at lower prices; however, this is emerging as a threat to remanufacturers, since it is witnessing consolidation and organization.
New analysis from Frost & Sullivan (automotive.frost.com), North American Remanufactured Engine and Transmission Aftermarket, reveals that the market earned revenues of $8.38 billion in 2006 and estimates this to reach $11.12 billion in 2013.
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“High price growth in the relatively small diesel engine segment will not be able to offset the growth that the large automatic transmission segment is expected to experience,” says Frost & Sullivan Industry Manager Avijit Ghosh. “Therefore, the remanufactured transmission segment is expected to grow more than the remanufactured engine segment.”
Scrappage rates, due to vehicles wearing out, have decreased because of improved vehicle quality. The combined effect of increasing sales and decreasing scrappage rates has led to more vehicles in the prime engine replacement age of four to nine years, which will drive the remanufactured engine and transmission aftermarket.
The challenge of obtaining cores for older model engines and transmissions may heighten; OE remanufacturers, in collaboration with automakers, have a core collection program in which automakers ensure the return of all cores. In addition, the environmental protection agency (EPA) mandates a 100 percent core return rate; failure to comply will cause the automaker to be penalized. This could make it difficult for aftermarket remanufacturers in obtaining cores in the future.
"Vehicles that may not last much longer and those in immediate need of parts turn to salvage yards that have used transmissions in stock," says Ghosh. "However, remanufactured units carry longer warranties, although they may not be available at every distributor site when a vehicle owner approaches for replacement."
With technological developments, it is difficult for used engine and transmission suppliers to warrant their engines and transmissions without correct quality information on those units. This provides opportunities to remanufactured engine and transmission suppliers to fight competition from the salvage (used) market.
North American Remanufactured Engine and Transmission Aftermarket is part of the Automotive & Transportation Growth Partnership Services program, and it provides unit shipment and revenue forecasts, revenues by product type, distribution channel analysis, and market share analysis among others. In this study, Frost & Sullivan's expert analysts thoroughly examine the following markets: Remanufactured Gasoline Engine, Diesel Engine, Automatic Transmission, and Manual Transmission. Interviews with the press are available.
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