Abstract
Improved Product Life and Availability of Lower-Priced Substitutes Impact Revenues
With manufacturers beginning to use aluminum in place of cast-iron, modern day hydraulic components assure a longer life due to their reduced part corrosion. Master cylinders and wheel cylinders manufactured with aluminum do not break down as often as products made from cast iron, thereby reducing opportunities for hydraulic component manufacturers. Further, since most components can be repaired or remanufactured instead of being replaced with an entirely new components, the availability of these lower-priced alternatives has reduced demand and price for certain hydraulic components, particularly calipers.
This Frost & Sullivan research service analyses the North American aftermarket for hydraulic brake system parts. The study has been segmented into master cylinders, wheel cylinders, and calipers and provides an overview and outlook for the total hydraulic brake system parts market.
Increasing Vehicle Age Drives Sale of Hydraulic Components
In 2004 average age of on-road passenger vehicles stood at 8.68 years and this figure is expected to reach around 9 years by 2011. Hence, as passenger cars and trucks continue to get incrementally older, replacement of master cylinders, wheel cylinders, and calipers are bound to see an increase. Also, despite the increase in gasoline prices the average miles driven by North Americans is increasing and this factor bodes particularly well for the replacement of calipers and wheel cylinders.
However, manufacturers, remanufactures, and repackagers of hydraulic components are facing increased competition from overseas factories. Due to their low-labor costs, these manufacturers produce parts at lesser prices than traditional suppliers, thereby inflicting a great deal of pricing pressure on domestic manufacturers. "Also, rising costs for steel, petroleum, and other raw materials are threatening the cost structure of hydraulic components manufacturers," says the analyst of this research service. "While the impact on hydraulics manufacturers has been less severe than it has been for suppliers of other brake components, increasing materials costs nevertheless continue to cause a rise in hydraulic parts prices."
Improved Long-term Outlook Forecast for the Hydraulics Aftermarket
As more and more calipers are being sold without brake pads, the average price of calipers continues to decline, resulting in lower revenues. However, demand for friction-ready calipers, which are cutting into sales of higher-priced loaded calipers, is expected to reach saturation in the aftermarket around 2008. While there is expected to be a subsequent improvement in caliper revenues, unit shipment demand for wheel cylinders are likely to witness an increase as rear drum brake systems begin to reappear as standard equipment for new vehicle models.
In 2004, calipers accounted for 66.0 per cent of hydraulic parts revenues, with master cylinders accounting for 21.1 per cent of revenues and wheel cylinders 12.9 per cent of revenues. "Brake calipers, which account for a majority of unit sales and revenues, are likely to suffer from loss of revenues as lesser expensive friction-ready calipers are increasingly replacing loaded calipers," says the analyst. "However, while manufacturers are likely to witness declining revenues over the forecast period, rebuilders and repackagers stand to profit during this period, particularly as sales of new master cylinders decline giving | 
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