Laws mandating the installation of tire pressure monitoring systems (TPMS) in new vehicles are leading to a swift increase in the installed base of this technology in the United States and European Union. With the proliferation of universal sensors and aggressive efforts to raise consumer awareness, the TPMS aftermarket is set for robust revenue growth, according to Frost & Sullivan.
New analysis from the Mountain View, CA-based firm finds that the market accounted for more than $111.70 million in revenue in 2011. Frost & Sullivan estimates this to reach $386.60 million by 2018.
The original equipment (OE) installation rate for TPMS in North America has remained at 100 percent since 2007. As sensor batteries typically last for six to 10 years, many vehicles will require new TPMS sensors by 2015.
“By 2014, nearly 38 percent of vehicles in North America will feature TPMS – a 13 percent increase from 2011 — thus increasing the addressable market size,” explained Frost & Sullivan analyst Kumar Saha. “In Europe, the TPMS installed base, though much lower, is expected to more than double by 2014 due to supportive legislation.”
As more European countries (including Turkey, Poland and Belgium) adopt winter tire legislations, TPMS revenue and unit sales will increase in the short and medium term. On the other hand, TPMS direct sensors installation in the United States will spike because of battery replacements, malfunctions and winter tire replacements. Additionally, if the U.S. government mandates functioning TPMS sensors at all times and tightens gas mileage policies, this technology will become a key component in vehicles.
High OE installation rates have also provided manufacturers with the economies of scale they need to reduce prices and offer attractive TPMS replacement packages to consumers.
However, low installer awareness and long battery life have curbed TPMS replacement volume, particularly in North America. High prices and the proliferation of SKU counts for sensors daunt independent distribution and retail channels, further restraining growth.
To stay competitive, Frost & Sullivan contends that suppliers need to put adequate pricing and product placement strategies in place. Offering universal sensors — already introduced in North America by key manufacturers — will reduce inventory burdens on independent retailers.
“Consumers are more likely to replace their sensors while purchasing new tires. As such, tire retailers and distributors are perfectly positioned to take full advantage of the sensor market,” concluded Saha. “They need to ensure that their front-line staff educates consumers, makes the right recommendations and capitalizes on sensor sales opportunities.”
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