Automotive Aftermarket In China Demand To Reach $4.9 Billion In 2009

CLEVELAND, OH -- (MARKET WIRE) -- Jan 19, 2006 -- The aftermarket for light vehicle components and parts in China is projected to increase at an annual rate of 13.8 percent, reaching 40 billion yuan (about $4.9 billion) in 2009. China's light vehicle parts aftermarket will experience dramatic levels of growth in the coming years, driven by the extremely high rates of new light vehicle sales the market is witnessing. This growing wave of modern vehicles is having an outsized effect in shaping China's rapidly expanding light vehicle park, and will provide additional aftermarket parts sales opportunities due to high vehicle content levels and the introduction of new emissions control technologies. These and other trends are presented in "Automotive Aftermarket in China," a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

Potential barriers to continued aftermarket parts revenue growth include China's lack of a functioning used car market with appropriate market-based pricing mechanisms, which hinders demand for replacement parts for used vehicle refurbishment, although progress is being made in this area. Beijing's plans to restructure the light vehicle industry could have a negative impact on global automakers setting up capacity. In addition, some OEMs such as Volkswagen have already begun to limit future expansion plans in the market as competition increases. Nonetheless, capacity will likely exceed demand in the near term, placing China in the same situation faced by most of the rest of the world. In addition, issues concerning the openness of China's markets continue to be expressed by trading partners, in spite of positive actions such as the country's accession to the World Trade Organization. Finally, rampant aftermarket parts counterfeiting could limit growth in the legitimate parts aftermarket going forward, causing intense levels of price competition.

The largest product category in China's light vehicle aftermarket is mechanical products, which include engine hard parts and chassis, and drivetrain and suspension parts and components. Demand for electronic products, including electronic controls and autosound equipment, will post the strongest advances. Replacement rates for electrical, exterior and structural parts will also experience robust growth going forward. Professional service providers -- the so-called do-it-for-me industry -- will remain dominant. The do-it-yourself segment of the aftermarket is tiny, but will grow strongly as China establishes a true used vehicle market.

Contact:
Corinne Gangloff

Email Contact
440-684-9600





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