|
Consolidation among the major battery manufacturers continues to shape the industry, particularly across Europe. Johann-Friedrich Dempwolff, Vice President Sales OEM/OES, VB Autobatterie GmbH, said: “If you look back to 1990, in Germany there were ten battery producers. In the UK there were at least five producers. In France there were several. In Italy there were over 50 very small businesses. All this has dramatically changed over the last decade. There are only a few strong players left in the marketplace.” “The result of tighter environmental requirements, together with other legislation, has been the closure of plants in Western Europe and a move to the Far East, particularly China, and to super-plants,” said Lucas Batteries’ David Haseler. “We have recently announced the closure of our Birmingham [UK] factory for manufacturing, and will be sourcing from companies in Asia. Our advantage is that these are company-owned plants which will allow us to maintain a close control over supply and quality.” Today, four valve regulated lead-acid battery manufacturers – of which three are American -- have emerged as global players: Johnson Controls, Delphi, Exide Technologies and Yuasa. These four companies collectively control 55% of the global market. Johnson Controls recently signaled its intention to buy Delphi’s global battery business for $212.5 million. Yuasa recently merged with Japan Storage Battery, forming GS Yuasa Corp. Yuasa holds an 8% share of the global lead storage battery market while Japan Storage Battery has a 6% share. Their combined market share of 14% ranks them in third place in the global market. The flood of imported batteries from tiger economies (such as China, Thailand, Indonesia and Malaysia) is also posing a serious challenge to European manufacturers. That has become a double-whammy for UK-based supplies since the imported units are especially cheap due to the weak dollar. Perversely, the Asian manufacturers have driven up the cost of lead because their consumption of it is so high. The price of oil is also driving up the cost of polypropylene used in battery manufacture. Technically speaking, the starter battery market has moved completely to calcium-calcium technology, and the change is now almost complete in the aftermarket, certainly in developed countries. Lucas Batteries’ Haseler said: “There is a fast-growing requirement for sealed [non-accessible] lids with re-condensing features in the OE market, and this changeover should be complete within a few years. This reflects the trend in the automotive industry for sealed units. This is being closely followed by the requirement for a ‘tip-tilt’ lid, that is, a lid that will not allow any acid to leak out of the battery for at least 30 minutes with the battery at any angle. If the battery is still being charged, this time reduces to two minutes. This is achieved by a more complex labyrinth within the lid. This trend originated in Germany. The aftermarket can be expected to follow within a year or so. Sealed and tip-tilt lids are a consequence of the trend for greater safety and, in particular, the need to prevent access to the acid within a battery. Following the unsuccessful launch of VRLA [valve regulated lead acid batteries] into the OE market a few years ago, a second wave is now underway in companies such as Daimler-Chrysler and Citroen with its recently-launched C3. The Citroen C3 is the first of the long-heralded stop-start cars, in which the engine stops whenever the car stops, leaving the battery to power all the electrical system. This regime will increase the cycling loads on the battery, a demand which VRLA technology is best suited to supply. The drive for fewer emissions, associated with the need for better fuel-consumption, has clearly resulted in the move to stop-start cars.” Austria’s Banner GmbH also sees the battery business moving toward calcium-calcium technology, particularly for cars introduced from 1997 onwards. Andreas Sperl, marketing manager, Banner GmbH, said: “These vehicles typically require modern charge management, higher voltage and maintenance free batteries. Given that batteries are often situated in places where the driver cannot see it -- let alone the brand name -- the battery must be maintenance free, leak proof and spill proof.” On the aftermarket side of the automotive starter battery business, the market is shaped by a number of factors. “The car parc is increasing,” added Dempwolffe. “Secondly, the product is improving so the life of product is longer. And the electrical systems – which in the end determines the life of the battery – if you have a good charging system in your car, then this extends the life of the battery. On the other hand, the power consumption is increasing which is minimising the battery life. But overall, we see that the battery is extending its life and the market is stable and slightly shrinking. This of course is another challenge, especially for smaller producers. We believe that there is a slight shrinkage of the market year-on-year.” According to industry sources, an OE vehicle starter battery for a passenger car should last around six years. That’s up from three or four years in the early 1990s. The useful life of a replacement battery may be a little less, perhaps around five years. For a commercial vehicle and motorcycle, manufacturers estimate the useful life of a battery is three or four years, “Due to Europe’s congested cities, a lot of cars are now traveling in stop and go traffic, adding wear on the battery,” added Sperl. “The sheer heat generated under the bonnet due to an overcrowded engine compartment and the fact that batteries are located close to the engine block means that batteries are just as likely to fail in the summer as in the winter. Ten years ago, we would have said our battery aftermarket business was seasonal. But now it’s an all year round business.” The power of brands appears to be diminishing in Europe, depending on the target segment. As far as the UK is concerned, that may relate to the fact that all the major battery manufacturers no longer produce batteries in Britain, as Paul Matarewicz, Managing Director for Varta Automotive Batterie, said: “It was driven by people who actually made batteries in the UK. As they have shut down and pulled out, they have been replaced by imported products from the Far East, South Africa and Brazil. These products are coming in without a label on and therefore you get a huge number of no-name products flooding the UK market. In the early 1990s, the UK aftermarket was about 60% branded. If you go back to the early 1980s, it was more like 90% branded. So there has been a very steady decline in brand.” Another major issue facing the industry is the escalating price of lead. Given that lead typically accounts for 40% of manufacturing costs, any severe oscillations in price can have serious consequences. But producers can’t chop and change their strategy every time the price of lead moves. While some producers use an array of measures to manage price movements such as hedging and improving their spent battery collection rates, surely the key is to negotiate with the OEMs to assist them in absorbing the lead price increases. Put simply, battery producers can’t absorb a 100% increase in price in 40% of raw material costs. Otherwise, we shall see yet more consolidation ahead. Although lead-acid starter batteries may not appear to have changed over the last four decades, internally, technological advances have been made to ensure that they keep up with modern demands. Lead-acid batteries will continue to start cars for many years, but the search continues for lighter, more efficient and cleaner replacements. Further information This article was taken from just-auto"s recent study: Global market review of light commercial vehicles – forecasts to 2009. To find out more about this report, view the table of contents or download a sample go to http://www.just-auto.com/pd.asp?art=33659&lk=art Source: www.just-auto.com This is just one of the 20,000 news items and articles featured on just-auto.com - an authoritative source of global automotive news and analysis for the auto sector. For more details visit the site at: http://www.just-auto.com |
Feed Entries