brakes

As growing raw material prices force brake component manufacturers to raise prices in the international market, there has been a steady influx of brake system parts to China. This entry of overseas suppliers is threatening the cost structure of domestic participants, since lower-labor costs are allowing offshore suppliers to sell brake components at significantly lower prices than domestic companies. In response to this challenge, while some domestic manufacturers are forming joint ventures with importers and outsourcing their production from low-cost overseas factories, others are either maintaining prices at current levels or raising prices, in order to compete exclusively in the high-priced premium segment. The continued growth in the vehicle population of the world is expected to have a positive impact on the demand for brake system parts. The vehicle parts are growing at a rate of one to two percent annually and this is expected to contribute to continual demand for friction parts, brake pads, rotors, and calipers. Additionally the average age of vehicles in service continues to increase with the 2004 average age of passenger vehicles standing at 8.68 years. This particularly augurs well for future demand, as older vehicles tend to require more preventive maintenance than newer models. Brake pads and rotors are the most commonly replaced parts in the aftermarket and the two accounted for a combined revenue share of 74.9 percent in 2004.