Palo Alto, CA-based consulting firm Frost & Sullivan predicts that revenues in the North American Class 6-8 truck powertrain systems and components aftermarket could grow 25% to $3.2 billion in revenue by 2012-up from $2.54 billion in 2005.
Much of this growth will be driven by the trucking industry's increasing share of handling freight compared to other modes of transportation.
"Newer powertrains are operationally more efficient, thus customers prefer updated trucks for freight transportation," said Frost & Sullivan GIC industry manager Avijit Ghosh. "This is encouraging fleet operators to upgrade their trucks and doing so also enables them to address the critical issue of driver retention, since drivers are more comfortable driving trucks with smooth and efficient powertrains."
Another factor that will propel the aftermarket is the implementation of the 2007 Environmental Protection Agency diesel engine exhaust emission standard for on-highway vehicles, Frost & Sullivan said. This is because the exhaust aftertreatment equipment that will be on 2007 models and later will drive up the base price of Class 6-8 trucks in the range of $7,000 to $11,000.
More fleet operators will opt to replace existing engines in older trucks with remanufactured engines and components as a more cost-effective alternative to buying new equipment. According to Frost & Sullivan, this will push growth of remanufactured engines and components aftermarket in the medium- to long term. Transmissions and components aftermarket will in turn experience a similar benefit.
Growth will be offset somewhat by increasing durability and reliability of powertrain systems and components, which means extended cycle times between replacements.
"As 'soft' parts become more durable, the expected lifespan of remanufactured engines are continuously increasing, reducing unit shipments in the aftermarket," said Ghosh. "Likewise, replacement rates of remanufactured transmissions are also likely to drastically decline because of the rapid technological upgrades this segment has experienced in the last few years."
Growth will be stronger from 2007 to 2009 because of higher replacement opportunities from older trucks that will enter their replacement phase. The average age of Class 6-8 trucks will also increase in that timeframe because of some in trucking pre-buying 2006 and older model trucks to avoid the more expensive 2007 and newer models.
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