Global demand to grow over 5% per year through 2007

Global demand to grow over 5% per year through 2007

Global demand for automotive aftermarket products is projected to increase five percent per year through 2007 to $144 billion. Gains will be driven by a steady increase in the global motor vehicle parc, continued maintenance and repair of older vehicles -- especially in the developing regions of the world -- and greater use of higher value automotive electronics.

Nevertheless, advances will slow from historical rates of growth due to better quality original equipment and replacement parts and significant price competition in many segments of the market. Gains will be fastest in the developing regions of the world, which generally have a higher proportion of older vehicles and a more rapidly expanding light vehicle parc compared to the more mature markets of North America, Western Europe and Japan.

Aftermarket annual growth in Western Europe will be below-average through 2007. The slow dismantling of the current European Union (EU) Block Exemption regulations in the region will allow for greater competition and reduce the relatively higher prices of aftermarket products. Nevertheless, growth will remain respectable considering the vast size of this market. The North American market will post the slowest gains due to continuing product improvements made by Original Equipment Manufacturers (OEMs) of light vehicles, combined with a younger light vehicle fleet in the US and Canada.

The Asia/Pacific region will exhibit particularly healthy gains, with the exception of Japan. China and India are both expected to register double-digit annual gains in their respective automotive aftermarkets through 2007. Rapidly rising incomes in this region will allow for rapid expansion in motor vehicle utilization rates in most countries, currently well below global standards.

Electronic products offer best growth prospects

Mechanical products accounted for 57 percent of overall aftermarket products demand in 2002. However, these are largely mature products which are subject to intense price competition. Their share of the overall market has been declining for more than a decade, and will continue to do so through 2007. Nevertheless, the segment includes several fast growing items such as brake parts and fuel injectors. The aftermarket for electronic products such as controls, modules, sound systems and components, navigation systems and security systems, offers the strongest prospects and will significantly outpace demand in the more mature mechanical and electrical products segments.

Study coverage

World Automotive Aftermarket is a new Freedonia study. It presents historical data through 2002 as well as forecasts to 2007 and 2012 for demand by product in six regions and 20 countries. In addition, the study assesses market share data and profiles leading participants worldwide.