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 European Union (EU) and the United States. With the proliferation of universal sensors and aggressive efforts to raise consumer awareness, the TPMS aftermarket is set for robust revenue growth, according to new analysis from Frost & Sullivan.
The consultancy estimates that the market earned revenues of more than $111.7 million in 2011 will reach $386.6 million by 2018.
By 2014, nearly 38% of vehicles in North America will feature TPMS—a 13% increase from 2011—thus, increasing the addressable market size. In Europe, the TPMS installed base, though much lower, is expected to more than double by 2014 due to supportive legislation.—Frost & Sullivan Industry Analyst Kumar Saha
In 2011, only about 2.3% of vehicles in operation in Europe, or 7.1 million, were equipped with direct TPMS. This installed base is forecast to grow to 36.7 million by 2018.
In the EU, transportation laws require vehicles to have an active TPMS. As sensor batteries typically last for six to 10 years, this mandate will drive breakage replacements in the forecast period and end-of-battery-life replacements beyond 2018.
As more European countries, including Belgium, Poland and Turkey, adopt winter tire legislations, TPMS revenues and unit sales will increase in the short and medium term. On the other hand, TPMS direct sensors installation in the US will spike due to battery replacements, malfunctions, and winter tire replacements.
Additionally, if the US government mandates functioning TPMS sensors at all times, and tightens gas mileage policies, the 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, Frost & Sullivan said.
However, low installer awareness and long battery life have curbed TPMS replacement volumes, particularly in North America. High prices and the proliferation of stock-keeping unit (SKU) counts for sensors daunt independent distribution and retail channels, further restraining growth.
To stay competitive, 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, the consultancy suggested.
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. They need to ensure that their front-line staff educates consumers, makes the right recommendations, and capitalizes on sensor sales opportunities.—Kumar Saha