Exhausts - A Garage Opportunity and a CAT Controversy

by Brian Taylor

A brief summary of the UK replacement exhaust market shows the market leaders are Arvin (Timax), Bosal and Tenneco (Walker). Exhaust life has doubled over the last 10 years, and at the same time the number of part numbers required for instant parc coverage has increased in line with the increased number of exhaust shapes and sizes, less welded joints, and increased number of vehicle marque and model variants in the parc. The addition of CATs has added to the problem. The result has been that even fast-fits – who supply the vast majority of replacement exhausts - find it difficult to supply everything off-the-shelf.

So WDs have come back into the distribution channel frame. But WDs with as low as 1 hour delivery times – sometimes quicker. Their growth means that garages can more effectively compete with fast-fits on price and the range offered. Garages also typically have better expertise with associated products to CAT fitment like engine tuning and diagnostics. It therefore presents them with a wonderful opportunity to re-enter an aftermarket sector they vacated to the fast-fits back in the 1960s. Tenneco research has already identified this trend and clearly it is an opportunity going begging.

Sales Trends

The following graph shows the trends in exhaust sales by value as recorded by NTDA members. It therefore indicates sales in the largest replacement exhaust sales channel – fast-fit – and is based on an index that was established at 100 in February 1989. Clearly the value has risen, although during the same time exhaust life has nearly doubled. More complex systems and again the introduction of CATs – has promoted this revenue increase – along with price inflation and parc growth. Looking at the index trends on a monthly basis demonstrates the seasonal affect with spring/summer being the peaks.

ANNUAL TRENDS IN EXHAUST REVENUE GROWTH AT FAST-FITS

Source; NTDA Monitor

SEASONAL TRENDS ON EXHAUST REVENUE SALES AT FAST-FITS

Source; NTDA Monitor

The total exhaust aftermarket in the UK – including CATs – is estimated at around £320m per annum – maybe slightly higher according to some. Stainless steel exhaust is estimated at around £10m of this, and despite the part number explosion and the move towards WD stocking, fast-fit is still currently the dominant channel. The Western European trends for exhausts are shown on the following graph. Fast-fit is growing across most of Europe towards being the major exhaust installer channel – although it is not yet the most dominant channel in all countries.

COMPONENT MARKET FORECASTS – WESTERN EUROPE

Source; FT Management Global Automotive Components Report

Chis Shilton of Arvin observed,

"Through the ‘90s we predicted a slow decline in the UK of 2% or 3% in unit volumes each year, but in the knowledge that this would be offset by growth in value. In 1996 there was a fairly marked decline of 6% in the number of exhausts sold but in 1997 the market held fairly steady. In the first 9 months of 1998 however unit volumes fell 7% or more, but the long-term trend in value is still positive and continues to rise. To capitalise on this, retailers and wholesalers will need to focus on the product and gain specialist knowledge".

Universal CAT Controversy

But a controversy appears to be creeping into the sector. A fairly recent development has been the introduction of universal CATs – for some time common in the USA. CES report that CAT prices have fallen over recent months as they have become more mainstream. But consumer demand for cheaper CATs has resulted in the introduction of universal CATS with suitably adapted pipework and flanges. Garages are demanding that any universal CAT looks as much like the original as possible and some major players are entering the market with such products. Although CES feel vehicle specific CATs provide the best option because they fit better and the quality is more assured, as distributors they supply to meet demand.

Ian Hesp of Arvin also reports a growing demand for universal CATS. He says,

"In the light of the forthcoming Type Approval legislation we have been surprised to see universal CATs appear both in the UK and Continental replacement markets. We certainly recommend caution to those wishing to stock or handle them. It is now expected that the EC Directive for replacement CAT Type Approval will be adopted in October 1999. I believe universal CATs will not meet these standards. By definition a universal fitment replacement CAT cannot meet the individual car Type performance requirements because they are not made to fit a specific model".

"These Cats were originally developed for the North American aftermarket which differs from our own in many ways. Vehicle engine capacities and floor plan designs are different along with the driving habits of motorists. Also some US sourced universal CATS use Nickel in their formulation – a substance not accepted within Europe due to the fact that it can produce Nickel Carbonyl which is hazardous to humans".

"The very nature of a universal CAT is such that the original system must often be modified and the replacement CAT either cut and clamped or welded into place. This is simply not viable on many smaller vehicles prevalent on British or Continental roads".

"It is true that there are few fitting stations capable of welding stainless steel. But we do not recommend the use of welding torches in the vicinity of a CAT because there is a risk that temperature changes can cause localised thermal imbalances and affect the ceramic monolith frequently found in CATs – including universal CATs".

"In addition universal CATs do not feature any hanging brackets whereas these are an integral part of an o.e. and replacement design. There is therefore the probability of increased stress and low points occurring after fitting".

As well as more direct-fit CAT suppliers entering the market, Jaystock also report the growth of universal CATs. But they also report a further alternative in the guise of remanufactured CATs. These units replace the ceramic monolith but re-utilise the existing shell and pipework. The delay in establishing legislation as to whether these developments are acceptable is causing confusion and uncertainty.

Universals Going for Type Approval

Universal CAT manufacturers source their basic core from the same companies who supply direct-fit aftermarket units and o.e. systems. The monoliths are fitted into a range of box shapes with varying bore sizes of the inlet and outlet pipes. The basic rule of thumb is to fit the biggest CAT possible. However engine tuning and diagnostic skills will be required as well as welding as already mentioned. It is not a straightforward job and many fast-fits could not attempt it.

As far as whether they will meet Type Approval in October, the jury is still out. The feeling is that certainly most current universal CATs would fail. But action is being taken by the core suppliers. They are increasing the amount of precious metals used on the monoliths and are currently applying for Type Approval in Spain. The outcome should become clear by September 1999.

Gaskets for CATs

Gaskets are an important consideration on all exhaust systems, but especially CAT fitted vehicles. Ian Hesp of Timax says,

"In the interest of efficiency and safety, only high integrity heat tolerant gaskets and fittings should be used when replacing CAT pipe jointing. High integrity gaskets are made from knitted wire and have heat resistant Mica filling to absorb the increased temperatures generated by CATs".

Stainless Steel and Performance Exhaust Growth

Giles Beumont of London Stainless Steel reports an increased failure of exhausts through corrosion on cars fitted with CATs. It has led motorists to seek alternatives to mild steel, especially when they realise the front pipe and CAT is made of stainless steel. Recognising this, London Stainless plan to reduce the cost of their Quicksilver range to be as close as possible to mild steel equivalents and so gain market share. He says,

"More and more cars with CATs are now moving out of their vehicle assembler warranty period and therefore motorists are liable for the cost of replacing the CAT itself. Even though replacement CAT prices have fallen as the market has become larger and more competitive, customers still get a nasty shock, because their perception is still in line with pre-CAT days. Some even ask if the CAT can be permanently removed from the system".

And Jetex reports strong growth for stainless steel back boxes. Drivers are keen to replace reflective designed exhaust boxes with the more efficient absorption design. He says the interest in sports systems is reviving.

"Drivers are looking for longer life as well as torque increases. The CAT reduces gas flow so a sports system will help reduce back pressure and so increase torque We can offer sport boxes plus a range of stainless steel designed systems".

I suppose it’s a bit like Gti marketing. When the product becomes too much of a commodity, something a bit different as an alternative can lead to a brand to new market and a higher market share of the commodity end. There’s always room for a bit of flare. It usually earns a premium in financial and image terms. However, we could be seeing the end of the stainless steel option retaining a premium in which case mild steel systems could see a downturn unless they too reduce in price. And universal CATs may yet become a key player in the aftermarket.

Latest News

CES has more than doubled the number of people in its CAT Express Service Team. They have spent 4 years setting up the database, publishing the CAT Express Service vehicle index and expanding the number of telesales lines. They now have 4,000 lines on their vehicle listing. They report units sales of exhausts are down but the unit cost of CATs has maintained market value.

Jaystock currently hold a range of 1,000 CATs. They report the market really took off in 1998. They have expanded outside London with branches in Reading, Birmingham and Southampton.

The new Autogem exhaust fitting catalogue includes 530 additional applications, 27 new part numbers and an updated cross reference section.

Double S Exhausts supply stainless steel systems to fit most cars. A new CD ROM catalogue is due for late spring.

The Woolfe Race Group can prevent you losing a customer with an odd-ball exhaust. Specialists in units for American cars they are the proud possessors of a pipe bending machine that allows the manufacture of almost any exhaust to a pattern, as well as units to fit American vehicles old and new. These units can be ordered locally by a member of the AMPAR network. They use IPC/Huth and Walker pipes imported directly from the USA.

Janspeed has turned its hand to making Nissan’s rapid Almera Gti 16v a whole lot sportier. It runs from the CAT back, using high grade 304 stainless steel throughout.

Timax has transferred its TRUCKMASTER commercial vehicle silencer to Wasey Exhausts. This gives them more space for the increasing range of car silencers and TESH CATs. The company is also increasing its CAT compatible gasket range and they also offer over 240 non-asbestos gaskets for exhaust applications. These include ring types, as well as flat and metal shims. The top selling 49 gaskets cover 60% of the market and a dispenser is available to carry this range. TESH also supplies a range of over 600 model specific and universal mountings for exhaust replacement, including mounting rubbers, bolts, springs, gaskets and clamps,

Magnex – the performance arm of CLF International – has launched its first ever performance exhaust system for Lotus. The Lotus Elise 1.8 system is made from stainless steel.

Hammerite announced a new edition to the Hermetite range in the form of a 250 gm size tube of their popular Exhaust Assembly paste. The 140 gm blister or tube pack is still available.

Jetex Exhausts supply the Laser range of stainless steel back boxes designed to fit standard systems. As well as Laser sport boxes, Jetex offers a range of stainless steel sports systems.

Anthony Glynn Associates supply exhausts from the Italian company Pedol, as well as the German company HJS which offers a range of silencer mountings and CATs. HJS recently purchased the Schmid silencer company and a selection of lines from this acquisition will shortly be introduced into the UK.

A new Bosal catalogue is due out in March which will include over 6,000 part numbers. The exhaust range includes exhausts, CATs, clamps, mountings and exhaust racking.

Fuel Parts UK supply a range of direct fit CATs which incorporates over 200 references. They are produced in the USA and Europe.

Tuberex is launching a range of universal and direct fit CATs under the CATREX brand name. This follows the launch of the ALUREX range of aluminised 2 year warranty systems.

London Steel provides the Quicksilver range of stainless steel exhausts. The new catalogue lists over 2,700 applications. (7/99)