Emerging Eastern European Electric Drives Market Gains Momentum
At an estimated $115.2 million, the developing Eastern European electric drives market is less than a tenth the size of its Western European counterpart. Improved customer acceptance, robust demand in key regions, technology advances as well as more competitive price levels are, however, poised to underline strong growth potential in this market. As manufacturers communicate the advantages of modern drive technology - superior performance, reliability, efficiency and energy savings - to customers, awareness of drive technology is poised to rise. This, in turn, is likely to prompt increased investment in drive technology.Currently, only a small percentage of motors in Eastern Europe are being used with drives technology. This situation is offering manufacturers the opportunity to push drives sales to the significant number of motor owners that have yet to install drives technology. Targeted customer education programmes aimed at boosting understanding of drive technology are seen as critical to encouraging demand from these prospective end users.The accession of eight Eastern European states to the European Union (EU) is also expected to provide a major thrust to market expansion. "The accession states are expected to benefit from a series of factors including improved access to markets, simpler trade, rising industrialisation and greater power as part of a major trading block," says Frost & Sullivan (www.motors.frost.com) Research Manager Mik Sabiers. "These factors should act to support investment in more advanced technologies, resulting in an increased installed base of drive solutions."Accounting for just over 40 per cent of total market revenues at present, Poland is expected to remain the key region in terms of total size and demand. Nonetheless, a broadening end-user base, enhanced customer understanding and deeper penetration of drive solutions across the industrial base are projected to support overall increase in all regions. The strongest growing market in revenue terms is forecast to be Slovenia with smaller markets such as the Baltic States also anticipated to advance strongly. User interest has continued to rise even as drives become steadily more compact, understandable, reliable, and interchangeable. At the same time, leading manufacturers are attempting to further develop their overall product lines. Such technological advances are expected to sustain heightened demand for drives and motivate more replacement and upgrade programmes.The market is forecast to record a healthy annual unit growth rate of just above 10 per cent during the 2003 to 2010 period. Annual revenue growth rate over the same time frame is pegged at 7.1 per cent, with total market revenues set to reach $185.8 million in 2010. With average price levels declining and users becoming more cognisant of the benefits of drive technology, a wider customer base is likely to start investing in the technology. Despite falling price levels, however, limited funds in many sectors of the user base are likely to dampen uptake levels. "As customers look for the latest drive solutions with no commensurate increase in price levels, price pressures are expected to continue to build, manufacturers will need to focus on various strategies to hold on to their current user base," cautions Mik Sabiers.The AC segment is likely to strengthen its domination over total market revenues - poised to rise to nearly 95.5 per cent over the 2003 to 2010 period. Demand for DC drives is expected to become increasingly focused and specialised, with revenues for this sector anticipated to fall from $9.2 million to $8.4 million over the same time period. Not surprisingly, most suppliers in the fragmented Eastern European electric drives market are active in the more lucrative AC drives segment. Leading suppliers include ABB and Siemens, while Danfoss, STI and Vacon also occupy good positions in niche areas. Customer loyalty remains low causing constant flux in competitor standing.Competitive pressures are forecast to intensify as more manufacturers are attracted by the region's good growth potential. "The key drivers of competition are price, service, specialisation and research and development. Across the region, users are looking for drives that provide high quality performance, good efficiency gains and overall cost saving. Manufacturers able to meet these needs are expected to gain share," concludes Mik Sabiers.Frost & Sullivan, an international consultancy firm, has been supporting clients' growth for over four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes strategic consultancy, market intelligence and management training. Our mission is to work with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of more than 500 consultants, industry experts, corporate trainers and support staff spans the globe with 19 offices worldwide.For further information, please contact:Kristina MenzefrickeP: +44 (0) 20 7343 8376
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