Performance air filters are considered to be one of the easiest upgrades made to vehicles. With the average unit pricing being considerably lower than other product categories in the performance modifications segment such as tires, wheels, brakes, ignition, exhaust, etc. Installment of performance air filters has been, traditionally, highly popular amongst end users.
Being said, the late North American economic turmoil expects to influence both unit shipment volume and revenues of all product categories in the performance upgrade and accessories segment due to the significant decrease in disposable income, and the change in consumer behavior. Consumers, in general, are not expected to spend on such products in the new year.
On a different note, the standard filters market for maintenance purposes are also expected to take a blow with the change in consumer maintenance trends. Since late 2008, there has been evidence of consumers extending the maintenance periods and deliberately defaulting on scheduled maintenance.
Unit shipments of products in the filters category (namely air filters and oil filters) are heavily dependent on vehicle servicing and minor maintenance trends, and are most vulnerable to consumer maintenance service behavior.
According to Frost & Sullivan's research 'The Selected Filters Aftermarket', 2007 unit shipments for total light vehicle filters summed up to an approximate 624.6 million units. This category includes air filters, oil filters, transmission filters, fuel filtration systems, cabin air filters, and coolant filters. In 2009, the unit shipments expects to drop to an approximate 573.9 million units.
In 2008, Frost & Sullivan surveyed 1,000 U.S. vehicle owners to determine which types of modifications are popular with different vehicle owners. Electronics, lighting, alarm systems, air intakes, and exhaust were among the other modifications on which vehicle owners were polled.
The results have shown that a decreasing percentage of vehicle owners have claimed that they had performed vehicle modifications in 2008. This is a strong indication that the weakened economy has influenced consumer spending trends on accessories and modification products.
To brighten things up, performance modifications in the air intake category (with performance air filters) has gained popularity amongst consumers who are most likely to perform performance modifications on their vehicle.
A separate survey of vehicle modification enthusiasts – those completing at least three modifications within the past 12 months – showed increased participation in the air intakes category. Forty percent of vehicle owners in this class said they had modified or upgraded their air intake systems in 2008, up from 36 percent in 2006.Figure 1 below compares the percentage of air intake modifications completed by respondents who qualify as modification enthusiasts by annual household income in 2008.
Although products in the performance air filtration category are easier to install and considerably cheaper than other performance modifications, most modification enthusiasts have turned to modifying both the air intake system with the performance air filter replacement. Hence, the overall costs to the consumer are of a substantial amount, and research indicates that consumers that opt for vehicle performance modifications tend to have a higher income than of the average vehicle owner. Those making more than $50,000 a year were more likely to upgrade their air intake systems than those making less. Enthusiasts with professional and advanced degrees were also more likely than those with a high school education or less.Figure 2 below compares the percentage of air intake modifications completed by respondents who qualify as modification enthusiasts by vehicle segment in 2008.
At the same time, air intake modifications were most popular amongst owners of vehicles in the luxury and specialty vehicle segment.
The research findings suggest that the air filters market and the performance air filters market is expected to go through a rough period in 2009, based on the fact that unit shipments in these categories are either heavily dependent on consumer maintenance trends or the availability of disposable income for investment on vehicle modifications. As the economy weakens, the overall unit shipments for performance filters expects to hinder. The overall findings suggest that participants in the performance filters category should concentrate their marketing efforts on catering to existing modification enthusiasts over the general consumer. Considering the consumer trend, vehicle modification enthusiasts with an average household income of $50,000 and over are most likely to upgrade their air intake and filter systems regardless of the price difference.
Respondents who do not qualify as modification enthusiasts are measurably more sensitive to the changing economy.
Kyu-min Oh is a Senior Industry Analyst for Frost & Sullivan's Automotive & Transportation research practice. He focuses on monitoring and analyzing emerging trends, technologies, and market behavior in the automotive aftermarket in the United States and Canada.