Aftermarket Is Crowded For Constant Velocity Driveaxle, Boot Kit Manufacturers.(Brief Article)

Intense competition is limiting market share and company growth within the constant velocity (CV) driveaxle and boot kit aftermarket despite increased sales generated by the success of sport utility vehicles (SUVs). New analysis from Frost & Sullivan, North American CV Driveaxle and Boot Kit Aftermarket, reveals that this industry generated revenues exceeding $342 million in 2001 and is projected to near $490 million in 2007.

"The growing popularity of SUVs in the last few years has propelled demand for aftermarket CV driveaxles and boot kits," says Frost & Sullivan Industry Analyst Joerg Dittmer. "However, extreme competition, lack of product differentiation, and low barriers to market entry have led many participants to lower their prices, which, in turn, has forced some major rebuilders to cut prices to maintain market share and sales volumes."

The industry has seen significant price and profit reduction, much to the detriment of suppliers, according to Frost & Sullivan. With an overabundance of small rebuilders and remanufacturers in the marketplace, larger remanufacturers that emphasize quality are under constant pressure to maintain their market presence, preserve volumes, and remain profitable, the study ststed. However, this is becoming increasingly difficult as foreign companies enter the field.

"The CV driveaxle and boot kit aftermarket is facing growing competition from price-competitive imports, especially from developing countries," says Dittmer. "Products manufactured overseas have significantly lower prices because of reduced labor costs as well as less-stringent environmental protection laws. In the end, these foreign imports are sold as part of a domestic manufacturer's second line, or as the exclusive product line for an importer."

To successfully compete against foreign and domestic companies, manufacturers must carry out acquisitions that can provide improved consumer relationships, access to additional distribution networks, and extended geographic reach, the study concluded. American Remanufacturers, Inc., Cardone Industries, Inc., and Mevotech, Inc. are among the firms included in the F&S analysis.

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