Cold weather, growth in global vehicles in operation offer positive signs for the battery aftermarket

A volatile weather season capped by Superstorm Sandy and winter storms hitting the United States during the week of Christmas point to a possible sales spike for replacement batteries.

Hundreds of thousands of vehicles in the Northeast received damage in the November storm and some will need a new battery to stay on the road. Winter storms that hit the Midwest on Christmas week finally brought the cold temperatures that contribute to battery failure.

Like this article? Sign up for our enews blasts by clicking here.

Manufacturers sell most of their batteries in the fall and early winter months, as distributors stock up on inventories for cold weather periods. Cold winters are generally good for battery sales, while mild seasons can depress sales.

The 2011 to 2012 winter was the fourth warmest ever recorded in the United States, according to the National Oceanic and Atmospheric Administration. Nonetheless, manufacturer-level revenues of battery suppliers increased by approximately 3.1 percent last year because an aging vehicle population supported a small increase in unit shipments, and higher raw material prices permitted manufacturers to pass on some of this raise in prices to customers.

However, the coming years threaten to be tougher for battery suppliers. Frost & Sullivan forecasts combined U.S. and Canadian revenues for battery replacement to increase by less than 1 percent annually over the next five to seven years, as new vehicle sales increase and lead costs decline, causing prices to fall from current levels.

Additionally, theft is another trend that affects battery sales. Reports of stolen batteries have increased across the United States, as prices for recycled lead have risen. In December, more than 700 batteries were stolen from an Exide Technologies facility in Texas.

For manufacturers and distributors struggling to grow battery sales in North America, the outlook across the rest of the world looks better. Data from Frost & Sullivan and LMC Forecasting show that total vehicles in operation (VIO) will increase sharply across Latin America, Eastern Europe and the ASEAN region.

The total number of passenger vehicles in use worldwide will grow by more than 20 percent over the next five to seven years, reaching 1.16 billion units in 2020.

VIO will increase by 2.1 percent annually in South America, 2.6 percent in Eastern Europe and 4.9 percent across Asia until 2020, compared to 1.5 percent in the U.S. and Canada.

In many regions of Eastern Europe and South America, there are few independent manufacturers and distributors serving the aftermarket, suggesting the potential for high growth.

In Western Europe, the threat of continued economic recession will probably dampen new automobile sales there. This historically benefits the aftermarket and promises to drive battery sales up for older vehicles.

As Frost & Sullivan expands its global coverage of the automotive aftermarket, additional research will reveal the size of major market participants, key sales channels and competitive outlook for batteries and related components in countries across the world.

Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.