Tire pressure monitoring systems: Growth market with caveats

December 13, 2012 // By Christoph Hammerschmidt
Laws mandating the installation of tire pressure monitoring systems (TPMS) in new vehicles are leading to a swift increase in the installed base of this technology in the European Union and the United States. With the proliferation of universal sensors and aggressive efforts to raise consumer awareness, the TPMS aftermarket is set for robust revenue growth, predicts Frost & Sullivan.

In a recent study the market research and analysis company finds that the market earned revenues of over $111.7 million in 2011 and estimates this to reach $386.6 million by 2018.

In 2011, only about 2.3 per cent of vehicles in operation in Europe, or 7.1 million, were equipped with direct TPMS. This installed base is forecast to grow to 36.7 million by 2018.

In the EU, transportation laws require vehicles to have an active TPMS. As sensor batteries typically last for 6 to 10 years, this mandate will drive breakage replacements in the forecast period and end-of-battery-life replacements beyond 2018.

“By 2014, nearly 38 per cent of vehicles in North America will feature TPMS – a 13 per cent increase from 2011 – thus, increasing the addressable market size,” said Frost & Sullivan Industry Analyst Kumar Saha. In Europe, the TPMS installed base, though much lower, is expected to more than double by 2014 due to supportive legislation.

As more European countries, including Belgium, Poland and Turkey, adopt winter tire legislations, TPMS revenues and unit sales will increase in the short and medium term. On the other hand, TPMS direct sensors installation in the U.S. will spike due to battery replacements, malfunctions, and winter tire replacements. Additionally, if the U.S. government mandates functioning TPMS sensors at all times and tightens gas mileage policies, the technology will become a key component in vehicles.

High OE installation rates have also provided manufacturers with the economies of scale they need to reduce prices and offer attractive TPMS replacement packages to consumers.

However, low installer awareness and long battery life have curbed TPMS replacement volumes, particularly in North America. High prices and the proliferation of stock-keeping unit counts for sensors daunt independent distribution and retail channels, further restraining growth.

To stay competitive, suppliers need to put adequate pricing and product placement strategies in place. Offering universal sensors, already introduced in North America by