the coming global aftermarket boom

The Coming Global Aftermarket BoomThe Coming Global Aftermarket Boom

TOTAL VEHICLE POPULATION TO GROW 30 PERCENT BY 2020TOTAL VEHICLE POPULATION TO GROW 30 PERCENT BY 2020

Stephen Spivey, Program Leader

Automotive & Transportation

April 9, 2013April 9, 2013

© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Today’s Presenter

Stephen Spivey, Program Leader

Frost & Sullivan

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• Fifteen years of combined experience in growth consulting, market research, journalism and consultative sales.

• Focused expertise in:

-- Market Sizing and Forecasting

-- Market Entry and Strategy Development

-- Competitive Analysis

• Industry experience in:

-- Automotive Industry and Automotive Aftermarket

-- Public Transportation and Logistics

-- News Media

Focus Points

Global Light Vehicles in Operation

GDP per Capita

Motor Vehicles per 1,000 People

Top Global Trends

Top 20 Parts

3

Distribution Structure

Market Size Potential

Global Hot Spots

Conclusions and Future Outlook

Briefly Discuss Occasion for the Analyst Briefing

• Total light vehicles in operation worldwide (passenger cars and light trucks) to increase by 30 percent by 2020

• This will generate increased global demand for aftermarket parts and service to meet the maintenance and repair needs of so many more vehicles

• However, in regions forecasted to have the highest vehicle

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• However, in regions forecasted to have the highest vehicle population growth, there are often few parts and service options for vehicle owners.

• The landscape suggests there are emerging growth opportunities across the aftermarket value chain in many parts of the world.

Global Light Vehicles in OperationGrowth in the overall vehicle population will drive demand for parts and service across the world, but

particularly in China and throughout Asia.

Western Europe

Eastern Europe

96.1

Asia250.0

Others116.9

Western

Eastern Europe118.4

Asia427.5

Others144.7

VIO: 1.02 billion

VIO: 1.32 billion

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NOTE: Asia includes: China, India, Indonesia, Japan, Korea, Malaysia, Philippines, Taiwan, Thailand, New Zealand

Eastern Europe includes: Bulgaria, Bosnia, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Serbia,

Slovakia, Slovenia, Turkey, Ukraine

North America includes: United States, Canada, Mexico,

South America includes: Argentina, Brazil,

Western Europe - Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain,

Sweden, Switzerland, UK NOTE: All figures are rounded; the base year is 2012 Source: LMC Forecasting / Frost & Sullivan

North America

286.0

South America

55.7

Europe211.5

North America

321.9

South America

83.9

Europe228.2

2012 2020

GDP per CapitaGDP per Capita has more than quadrupled in Brazil, China and Russia and has more than doubled in many other countries over the past 10 years, giving hundreds of millions more people the chance to own vehicles.

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Source: World Bank

Motor Vehicles per 1,000 PeopleIn China, the number of vehicles per 1,000 people has jumped from 15 to 58 between 2003 and 2010, with smaller increases in the other emerging countries.

644

582

357

796

695

607

537

797

400

500

600

700

800

900

Mo

tor

Veh

icle

s p

er

1,0

00 P

eo

ple

7

164135

15 12

203 202

127

209184

5818

275 271

165

0

100

200

300

Mo

tor

Veh

icle

s p

er

1,0

00 P

eo

ple

2003 2004 2005 2006 2007 2008 2009 2010

Source: World Bank and Frost & Sullivan analysis

Key Regional Market – Emerging Economies (BRIC Vs. N5):

2.5%(12.0%)

6.0% 6.0%

8.0%

6.0% (5.0%) 5.0% 0.5%

Un

it S

ale

s (

Mil

lio

n)

8

• China: The continuing economic growth is expected to push the market by another 8% to reach the 20

Million mark in 2013. SUV. Pickup and premium vehicles will continue to be the buzz word for the Chinese

market. Low vehicle penetration, increasing income levels and urbanization will continue to push the market

for vehicles.

• Economic growth of about 3.5% owing to the infrastructure developments for FIFA World Cup in 2014,

slash in interest rates and local production of Brazil specific models will maintain the YoY growth in

Brazil for 2013.

• Replacement market and high customer confidence to push the Russian Light Vehicle market to join the 3

Million club in 2013. Budget cars and premium model will continue to drive the market.

• Rising inflation is one of the key reason to slow down the growth rate in the Indian market for vehicles. Source: LMC forecasting, Frost & Sullivan analysis.

Vehicles in Operation by Geographic RegionBased on current trends, Asia will be home to one in three personal-use vehicles by 2020, while more mature regions will see their share of total cars and light trucks decline.

U.S./Canada26.1%

Asia24.6%

Rest of World11.5%

U.S./Canada

LATAM

Western Europe

U.S./Canada22.4%

Rest of World10.9%

Automotive Aftermarket: Vehicles in Operation by Region, Global, 2012

Automotive Aftermarket: Vehicles in Operation by Region, Global, 2020

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LATAM7.5%

Western Europe20.8%

Eastern Europe

9.5%

24.6% Western Europe

Eastern Europe

Asia

Rest of World

LATAM8.2%

Western Europe17.2%Eastern

Europe8.9%

Asia32.3%

Source: Frost & Sullivan analysis.

Top Global TrendsThe global aftermarket is ripe with opportunity, but there are also challenges to address, such as the lack of skilled labor and changes in the mix of vehicles that will require parts and service.

6

7

8

9

10

Cert

ain

ty

New, complex component technologies

Increasing vehicles in operation

Strategic sourcing

Increased electronic content

Trade barriers

Proliferation of vehicle makes and models

Shift in vehicle segment mix Changing consumer behavior

Emergence of new distribution, service

channels

Need for technician training, skilled labor

10

0

1

2

3

4

5

0 1 2 3 4 5 6 7 8 9 10

Cert

ain

ty

Impact

channelsEconomic rebound Rising fuel prices


Top 20 PartsThe top 20 product categories only represents about half of all revenues, illustrating the total size and diversity of the aftermarket.

Interior Accessories

1%

Exhaust Components1%

Audio Receivers

1%

Remanufactured Engines and Transmissions

2%

Spark Plugs

Suspension Components

1%

Motor Oil10%

Wiper Blades1%

Exterior Accessories1%

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Tires15%

Steering/Linkage Components

1%

Waxes/Polishes1%

Starters/Alternators1% Collision/Body

6%

Antifreeze/Performance Chemicals1%

Batteries3%

Spark Plugs1%

Lighting1%

Others47%

Wheels1%

Brakes4%


Distribution StructureThere is a lack of aftermarket distribution structure in many regions of the world, suggesting possible lucrative opportunities to consolidate these players or invest in new start-ups.

OES Auto Retailers

Internet / Mail

OEMExporter

New Car Dealer

Parallel Importer

Offshore Manufacturer

Mass Merchandisers

Production Engine

Domestic Parts Manufacturer

Remanufacturer Salvage Yard

Warehouse Clubs

Collision Parts Re-Distribution

WD’s & PGsService Chain Dist. Centers

Step 1

Automotive Aftermarket: Distribution Structure, Global, 2012

Frost & Sullivan finds that there is weak competition in these markets outside of the mature North American and Western European aftermarkets.

ManufacturerEst.

$322.4 billion

Wholesale

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Internet / Mail Order

New Car Dealer Parts Depts

New Car Dealer Service Depts

Retailer Service Bays

Production Engine Rebuilders

Body Shops

Collision Parts Distributors

Independent Installers

Jobbers/ Wagon Jobbers

Re-Distribution Jobber

Service Chain Outlets

Step 2

Vehicle Owners


Step 3

Est. $496.1 billion

RetailEst.

$992.1 billion

Market Size PotentialGrowth rates will be comparatively low in the early years of the vehicle life cycle, but the revenue potential will increase more as they age and enter the aftermarket in greater numbers.

Revenues (2012) Revenues (2020) CAGR

(2011 – 2018)

Tires $ 63.3 Bn $ 128.2 Bn 9.2%

Batteries $ 14.0 Bn $ 15.6 Bn 1.3%

Brake Parts $ 20.0 Bn $ 34.0 Bn 6.9%

Filters $ 7.9 Bn $ 18.6 Bn 11.3%

Collision Body $ 19.5 Bn $ 21.9 Bn 1.5%

•The aftermarket is benefiting from the slow recovery of the economic recession.

•More existing vehicle owners are keeping their cars longer instead of buying a new one, driving demand for maintenance and repair services.

•Products in the maintenance categories are expected to

Automotive Aftermarket: Manufacturer-level Replacement Parts Revenues by Category, Global, 2012-2020

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Collision Body $ 19.5 Bn $ 21.9 Bn 1.5%

Starters & Alternators

$ 8.3 Bn $ 9.4 Bn 1.5%

Lighting $ 6.0 Bn $ 6.5 Bn 0.9%

Wheels $ 3.5 Bn $ 3.9 Bn 1.4%

Exhaust Components

$ 3.5 Bn $ 7.7 Bn 10.4%

Spark Plugs $ 3.0 Bn $ 3.9 Bn 3.4%

Others $ 173.2 Bn $ 217.2 Bn 2.9%

Total $322.4 Billion $466.9 Billion 4.7%

categories are expected to grow at strong rates, including brake parts, tires and exhaust components.

•Some low-growth categories, such as batteries, lighting and starters/alternators are threatened by low-cost competition.

•Others includes a wide range of different products, including accessories, electronics, fluids, tools and remanufactured components, among many others.


Global Hot SpotsThere are still attractive growth opportunities in mature regions such as North America and Western Europe, as well as the emerging areas of Asia, South America and Eastern Europe.

Western EuropeAdvanced vehicle technologies, components entering the aftermarket.

North AmericaIncreasing average vehicle age driving demand for more expensive repairs.

Eastern EuropeLack of independent distribution, service chains suggest attractive market potential for new entrants.

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entering the aftermarket.

South AmericaLack of independent distribution, service chains suggest attractive market potential for new entrants.

AsiaRapid increase in vehicles in operation suggests high growth potential for vehicle maintenance and service.

OthersNew distribution and service channels to support growth in countries such as Australia, South Africa.

Conclusions and Future OutlookThe table is set for solid, long-term growth of the automotive aftermarket throughout Asia and Latin America, with ongoing new opportunities in mature regions such as North America and Europe.

Global Automotive Aftermarket, Conclusions and Future Outlook, 2013–2020

Vehicle populations will grow the fastest in China, India, Russia and Latin America.

Total personal-use vehicles in operation will increse by about 30 percent over the next 5-7 years, reaching 1.3 billion.

Manufacturer-level component

Rising living standards across the world, as measured by

GDP per capita, will allow tens of millions more people to own

a vehicle for the first time.

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Global Automotive Aftermarket

the increasing demand for vehicle

OEMs are strongly positioned to capture and consolidate much of the increasing demand for vehicle

parts and services.

Many of the fastest-growing regions lack wholesale buying

groups, service chains and other infrastructure.

Demand for routine maintenance parts such as tires, filters and brakes to

increase sharply in the coming years.

Emergence of new distribution and service channels needed to serve vehicle owners and

technicians.

Manufacturer-level component revenues now worth $322.4

billion worldwide, with sales to vehicle owners estimated at $1

trillion.


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For Additional Information

Jeannette Garcia

Corporate Communications


(210) 477-8427

[email protected]

Stephen Spivey

Program Leader


(210) 247-3845

[email protected]

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the coming global aftermarket boom

Automotive

capitamotor vehicles

number of vehicles

total light vehicles

pointsglobal light vehicles

south south america

asia asia

ukrainenorth america

operation growth