Revenues in the mature North American Class 4 to 8 select original equipment (OE) wheel-end component market will dip, due to low product differentiation and the increasing penetration of air disc brakes (ADBs) in Class 8 trucks. Profit margins of tier I suppliers will taper further with the entry of low-cost foreign vendors in a price-sensitive market. However, OEMs are hopeful that the popularity and lower cost of drum brakes will help them beat back the competition from ADB vendors, while the creation of standard and premium product lines will ease the pricing pressures somewhat.
New analysis from Frost & Sullivan, "Strategic Analysis of the North American Class 4–8 Select OE Wheel-end Components Market," finds that the market earned revenues of $275.5 million in 2014 and estimates this to decline to $237.2 million in 2022 due to lower truck production volumes and the rise in ADB penetration in Class 8 trucks.
"Government policies regulating stopping distances will steer advancements in brake technology, thus bringing the performance attributes of drum brakes on par with ADB," says Frost & Sullivan Intelligent Mobility Senior Industry Analyst Wallace Lau. "Drum brake technology providers will continue to invest in innovation and enhanced performance capabilities to compete head on with ADBs in the trucking industry."
To maintain a competitive edge, OE wheel-end component manufacturers need to push for technological advancements, particularly in terms of superior performance, lower weight and smaller form factor. Manufacturers can also promote the lower total cost of ownership (TCO) to spur the adoption of high-margin, quality products and strengthen brand value.
"Higher standards of quality along with targeted positioning and pricing of domestic wheel-end components will help counter the challenge posed by foreign participants," notes Lau. "Private labeling can prove another astute strategy to determine the top manufacturers in the North American OE wheel-end component market."