North American Ignition Caps; Rotors and Distributors Aftermarket

Abstract

Increased Application of DIS in Vehicle Parc Challenges Market Growth

The emergence of vehicles equipped with distributorless ignition systems (DIS) is a key challenge faced by manufacturers of ignition caps, rotors and distributors. In 2004, 65 to 70 percent of vehicles had DIS and with the numbers steadily increasing, sustaining demand in the aftermarket for distributor ignition caps, rotors, distributors is becoming increasingly difficult. Leveraging the growth opportunities in the performance aftermarket for racing applications, where many associations reject the participation of DIS equipped vehicles, is going to be critical for boosting revenues. In addition, manufacturers grappling with issues surrounding longer product lifecycles (10-12 years) of caps, rotors, and distributors in the consumer segment are likely to benefit from the higher replacement rates found in the performance market where users are more inclined to upgrade to the latest products.

This Frost & Sullivan research service examines the North American ignition caps, rotors and distributors aftermarket. It also discusses market drivers and restraints while offering unit shipment and revenue forecasts, trends by product type, pricing strategies, analysis of distribution channels and market share of major participants. The comprehensive focus of this study enables companies to align their positioning strategies to benefit from the changing markets and obtain maximum return on investment.

Performance Market Demands Technically Sophisticated Caps, Rotors, and Distributors

While the performance market is assisting in curbing a drastic decline in sales for caps, rotors, and distributors, manufacturers have their task cut out in terms of offering high quality products that can withstand stringent racing conditions. The performance replacement market for distributors has grown by 5.0 to 6.0 percent in 2004 and is expected to grow further with the increase in the number of races. "With more than 1000 different racetracks in the United States and more than 100 racecars participating in each racetrack per week, niche segments such as high-performance and racing are still strong and are likely to remain so for the next 5 to 10 years at least," observes the analyst of this research service.

Manufacturers should target the professional hardcore racing market in the future by entering into agreements with racing associations and sporting authorities such as Grand Telly Motor Sports and Lear manufacturing. Since this segment demands technologically advanced distributors that use optical triggers, quality and price are going to be major competitive factors in the performance market.

Racing Applications Create Demand for Higher Priced Products

The price of ignition caps and rotors witnessed a slow increase in 2002 and 2003 because of the rise in the purchase of used cars during this period. However, the rate of price decline is expected to reduce after 2007 due to the demand for high priced ignition caps rotors and distributors in the performance market.

"Manufacturers catering to the performance segment can offer their products at a premium given the use of much higher quality caps, rotors, and distributors in a racing environment," says the analyst. "In fact, the weighted average price of distributors used in racing applications is around $300, much higher than that of normal distributors, which is around $180".