Lead Acid Battery Industry Consolidating

New Frost & Sullivan report sees intense competition as key driving factor

Published: 15-Dec-2004

PALO ALTO, Calif.--(BUSINESS WIRE)--Dec. 13, 2004--Even as the North American replacement market for lead acid (LA) batteries has been growing steadily, participants in the market are challenged due to intense competition. This competition is based on price, distribution channels, technology, performance, features, and product capabilities.

New analysis from Frost & Sullivan (http://www.batteries.frost.com), North American Lead Acid Battery Market -- Replacement Market Analysis reveals that revenue in this market totaled $4.2 billion in 2003 and projects to reach $6.12 billion in 2010.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the North American Lead Acid Battery Market -- Replacement Market Analysis -- then send an email to Natalie Benavides - Corporate Communications at natalie.benavides@frost.com with the following information: your full name, company name, title, telephone number, fax number, and email. Upon receipt of the above information, an overview will be sent to you via e-mail.

Consolidation in distribution channels has led to fewer accounts in the aftermarket chain being responsible for a larger share of the aftermarket battery sales, thereby creating intense competition among the manufacturers as they vie to cater to the demands of a core group of aftermarket vendors. This is especially apparent in the starting, lighting and ignition (SLI) battery category, which has a high percentage of private label batteries that are driven by the large distribution networks spread across the market place.

"The consolidation in the aftermarket distribution network has led to fewer accounts having a larger share of the market -- leading to increased bargaining power for the aftermarket channel," says Frost & Sullivan Research Analyst Hariharan Balasubramanian. "This has allowed the aftermarket channel to demand low prices, high fill rates, and prompt service from vendors."

To provide high fill rates, battery manufacturers have to maintain greater levels of inventory, resulting in increased carrying expenses. This factor, coupled with low prices and the rising cost of lead, is lowering profit margins for manufacturers.

"However, unique value-added services -- coupled with the increased product performance/features -- can help create brand distinction and overcome the minimal product differentiation issues. An area of creating differentiation or offering value to the client is by creating more product categories that cater to specific applications and by offering better after-sales services that bring in tangible benefits," says Hariharan Balasubramanian.

A mature or crowded market is witness to increased consolidation among the entire value chain. To make an impact in the market place, the vendors need to be proactive in their approach. Upgraded product portfolios combined with aggressive push on factory owned brands, facilitate wider knowledge among the users of the product, thereby creating an opportunity for the vendor to capture the market share and also to increase the revenues.

The demand for lead acid batteries in the replacement market is expected to increase as related products like power supplies: backup power and power conversion devices and automobiles show rapid technological advances. Factors such as bulky battery size, frequent maintenance, increasing prices, and short product life are restraining market growth and must be overcome.

The North American Lead Acid Battery Market -- Replacement Market Analysis is a part of the Battery Subscription. The study looks at the opportunities of growth in the LA battery replacement market based on the type of applications. The research covers the SLI LA battery; motive lead acid (MLA) battery, and stationary lead acid (SLA) battery markets. Each application market -- ranging from SLI to MLA and SLA batteries -- has been segmented and studied based on distribution and aftermarket trends. Executive summaries and analyst interviews are available to the press.

Frost & Sullivan, a global growth consulting company founded in 1961, partners with clients to create value through innovative growth strategies. The foundation of this partnership approach is our Growth Partnership Services platform, whereby we provide industry research, marketing strategies, consulting and training to our clients to help grow their business. A key benefit that Frost & Sullivan brings to its clients is a global perspective on a broad range of industries, markets, technologies, econometrics, and demographics. With a client list that includes Global 1000 companies, emerging companies, as well as the investment community, Frost & Sullivan has evolved into one of the premier growth consulting companies in the world. For more information, please visit http://www.frost.com.

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