MOUNTAIN VIEW, Calif. (April 8, 2016) — Premium automotive batteries will drive overall revenue growth in the market segment, according to Frost & Sullivan research.
In its latest report, “Strategic Analysis of the North American Automotive Batteries Aftermarket,” Frost & Sullivan noted that the increase in the number of vehicles in operation and the rise in the average vehicle age from 10.5 to 10.8 years are expected to provide a thrust to the batteries aftermarket in North America.
“However, with newer vehicles being equipped with advanced, higher-priced, premium batteries, such as AGM (absorbed glass mat) and EFB (enhanced flooded batteries), there is considerable scope for revenue growth,” Frost & Sullivan said. “This higher uptake of complex battery technologies will also lead to the rise of battery specialists and traditional distributors as the most preferred channels of distribution.”
Meanwhile, the growing prevalence of private label products and the consolidation of distributors will put downward pressure on prices and reduce the bargaining power of battery suppliers, according to Frost, noting that distributors also have started directly sourcing from manufacturers in Asia, “which might further force the suppliers to reduce the prices.”
Hybrid electric vehicle (HEV) batteries are another growth market, Mountain View-based Frost said.
“The high costs involved in the replacement of HEV batteries cause vehicle owners to opt for original equipment services (OES) instead of independent aftermarket suppliers.
“In response, aftermarket installers have started focusing on the reconditioning and refurbishment of HEV batteries to optimize the growing demand in the replacement market segment,” Frost said.