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Understanding the Vehicle Battery Market in European and Emerging Markets page 2

Overview

Battery technologies are evolving quickly and are set to have a profound effect on the

automotive industry, changing the landscape of the automotive aftermarket in the near

future. From the battery simply playing an ancillary role in the start-up procedure, it is now

much more central to the running of the car. This has an impact on the aftermarket,

influencing how motorists shop for and fit their replacement batteries.

The car battery already fulfils a number of roles within the vehicle beyond simply starting

the engine. It supplies power to the starter and ignition system to fire the engine, it supplies

extra power when the vehicle's electrical load exceeds the supply from the charging

system, and it also acts as a voltage stabiliser in the electrical system, evening out voltage

spikes and preventing them from damaging other components in the electrical system.

In older vehicles, the battery is primarily used only to start the car. Now, as cars become

more complex and more reliant on computers and electrical equipment, the battery is under

more strain. In stop-start vehicles, it must start the engine many more times than before

whilst also continuing to provide power to all of the electrical systems whilst the engine is

stopped. As start-stop technologies, hybrid vehicles and pure electric vehicles become

more common, the role of the battery in the car – and the technology that underpins it – will

change. These changes will affect the aftermarket, as the first wave of vehicles with start-

stop technology start to require replacement components, impacting the channels that are

able to service and replace these complex batteries.

Over the past five years, there has been increasing competition from major players such as

Johnson Controls, FIAMM and Exide as manufacturers respond to the challenges that

arose out of the recent financial crisis. As a result of the European economic downturn,

there has been an excess of supply relative to demand – particularly for standard batteries

– as motorists in mature markets in particular have deferred replacing the batteries in their

cars until they absolutely have to. This has changed the market, with companies that

previously only supplied original equipment manufacturers (OEMs) starting to move into

supplying the aftermarket.

Looking to the future, the intensity of the competition between battery manufacturers will

increase as new players from the consumer electronics sector start to enter the market due

to the introduction of lithium-ion batteries. To compete effectively, it will be necessary for

battery manufacturers to merge or act in partnership in order to increase their share of the

aftermarket, offering a full service to OEMs.

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Understanding the Vehicle Battery Market in European and Emerging Markets page 3

Battery aftermarket sales

Battery sales in the aftermarket are driven by a number of factors including the number of

vehicles in use, average battery life, average age of vehicles, average miles driven,

weather conditions and population growth. Aftermarket demand historically has been less

cyclical than OEM demand due to the three- to five-year replacement cycle.

Another notable trend in the battery aftermarket relates to the sheer complexity of the

starter battery itself and the extent to which an independent garage has the know-how and

equipment to install a modern replacement battery. The introduction of more absorbed

glass mat (AGM) batteries into the market, together with the gradual decrease in the

number of standard batteries, will challenge aftermarket players as they are forced to adapt

or replace existing equipment in order to be able to service and install this type of battery.

While AGM batteries are only just beginning to be seen in the aftermarket, this will change

rapidly as there are many vehicles in the parc that are now beginning to reach the point of

replacement, and manufacturers are continuing to develop vehicles with these batteries

fitted as standard. As a result, the expectation is that AGM batteries will overtake standard

batteries in the aftermarket within the next five years. This will profoundly change the shape

of the aftermarket. Vehicles equipped with a start-stop function will remove the possibility of

the motorist replacing the battery themselves because the process is too expensive and

complex, with motorists having to use alternative channels, particularly vehicle

manufacturer networks (VMNs) for the installation of their batteries.

To find out more about the aftermarket opportunities in the automotive sector please

contact enquiries@verdictretail.com

The full report is available to purchase in our store.

Some of our recent aftermarket channel report titles:

MOTORIST ATTITUDES TO COMPONENT REPLACEMENT: INSIGHT AND

RECOMMENDATIONS

ATTITUDES TOWARD VEHICLE SERVICING AND REPLACEMENT: INSIGHT AND

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HOW MOTORISTS USE THE INTERNET: INSIGHT AND RECOMMENDATIONS