Abstract
Incomplete System Diagnoses Challenge Market Credibility
Heating, ventilation, and air conditioning (HVAC) service was one of the fastest growing automotive repair sectors in 2002. However, an estimated 50 percent of all HVAC repairs resulted in system failure and dissatisfied customers. This was not simply the result of improper servicing due to the complexity of the systems but also that of warranty replacements practices wherein only the failed component was substituted. Since HVAC components are interdependent, the deterioration of one part can have a domino effect. To curtail the resultant escalating costs, market participants have instituted technician support strategies such electronic catalogs, a wide spectrum of training options, and diagnostic and equipment protection tools. Each component of the strategy is designed to reinforce full system inspection and repair to fend off repeat visits.
This Frost & Sullivan research examines the North American heating, ventilation, and air conditioning aftermarket and provides a comprehensive analysis of the impact of the increase in new vehicle air conditioning installation rates and that of zone systems on the growth of aftermarket component sales. The study provides detailed examination of core components including, the compressor, condenser, evaporator, heater core, accumulator or receiver-drier, expansion valve, and radiator.
Passengers' Desire for Greater Comfort Drives Market Profitability
Despite recent concerns regarding rising fuel costs, North Americans continue to choose comfort over fuel economy in their choice of cars and in their air conditioning usage habits. The main factor stimulating development of the HVAC aftermarket is the steady increase in the number of repairs prompted by increased use of vehicle air conditioning systems. "Prolonged periods of high temperature and humidity as well as use of leather upholstery have resulted in consumers using the air conditioning system more often--not just for cooling but also for drying and dehumidification," states the analyst.
Considering that it is a non-essential component to the operation of the vehicle, air-conditioning repair is expensive. The high costs notwithstanding, the HVAC aftermarket continues to experience growth due to customers' desire for air-conditioned comfort and the extended vehicle lifespan. In 2003, the average age of a North American vehicle was 8.7 years and continues to increase, whereas, the air conditioning systems' major components' life expectancy is five to seven years. Many people opt to repair the malfunctioning system because of the expectation of the vehicle's longevity. Changing climate control from manual to automatic and the introduction of multi-zone air conditioning is also expected to bolster aftermarket revenue due to the increase in the number of components and increased usage.
Branding Strategies Needed to Avoid Commodity Positioning
Original equipment quality has become the standard in aftermarket air conditioning components, leaving little room for participants to distinguish themselves. The aftermarket race has become one of value for dollar, where competitors tend to sell the 'brand' package. The race toward the "all makes, all models" strategic position has posed some interesting challenges including expanding inventories, increased business costs associated with training and support materials, and product sourcing.
The automotive aftermarket has realized the advantages of using innovative marketing and selling strategies in a competitive market. "Several companies have gone beyond basic brand development into full-scale branding strategies, where the actual product is only one component of the total integrated value-add service model," notes the analyst. With most companies getting the quality, design, and price mix right, technician awareness and loyalty are being developed as marketable services.
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