THE worldwide market for vehicle maintenance is growing more strongly than the market for original equipment manufacture (OEM) as train builders try to strengthen their presence in the after-sales market to compensate for the sluggish growth in OEM. This is the conclusion of SCI Verkehr's latest market study entitled Vehicle Maintenance - Global Market Trends in After-Sales Service.

Many railways and train operators which have been deeply-rooted in the maintenance of their own fleets for years have restructured their maintenance divisions or awarded contracts to external partners not least due to increasing costs. In addition, technical requirements for maintenance have become more demanding in recent years so that specialists are now required. As a result, versatile organisational models for the maintenance of rolling stock have been developed in the various world market regions, but some individual country markets differ significantly within a region.

The current annual market volume for after-sales services is worth around €38.5bn and will grow by an average of 3.4% a year by 2016. Compared with falling growth rates in the OEM business, development in the after-sales market remains positive and the share of maintenance services within the total market for rolling stock - both OEM and after sales - will continue to increase.

The market for train maintenance is growing in all regions of the world but Asia is the main driver. On the one hand, further and sometimes large-scale expansion of rolling stock fleets in all vehicle segments mean a greater number of vehicles in the workshops, while on the other hand the amount of maintenance required will grow due to the increasing level of both the technology and the amount of equipment on the vehicles. For example, China wants to increase the number of depots for its expanding high-speed train fleet from four currently to almost 30. Similar developments can be observed in Africa and the Middle East, South and Central America and the former Soviet Union albeit at a considerably smaller market volume.

006MRT KaohsiungAround 60% of the total market is still accounted for by railways which maintain their own vehicles and therefore have a decisive influence on the market for traditional reasons. While there is a trend among railways to focus on their core business and transfer maintenance and repair of their vehicles to manufacturers or independent providers, this market is developing more slowly than was expected by many companies in recent years. Switching responsibility for vehicle maintenance is a ground-breaking and time-consuming process, especially for European state-owned railways, and a more rapid shift in market share is being hindered by the traditional structures of the train operators which have their own large and high-quality maintenance facilities.

Nevertheless, Western Europe is the world's largest market for after sales with consistent growth. The accessibility of the maintenance business in Western Europe for manufacturers and independent providers has increased in recent years and has led to a very diverse market development.

While operators in Western European countries such as Britain, Sweden and partly in Spain have for many years handed large parts of their train maintenance to manufacturers or other companies through long-term contracts, markets in France, Germany, Austria, Switzerland and Italy continue to be dominated by the maintenance divisions of the state railways. However, some of these divisions are currently being consolidated, and sectors of the large European state railways are increasingly opening up for third-party business.

In Italy, Alstom has entered the market and maintains the AGV high-speed trains it sold to the private operator NTV. The introduction of ECM (Entity in Charge of Maintenance) certification, mainly in freight transport, can transfer responsibility for maintenance from the owner of the vehicles to a certified company which will open the market for independent providers and manufacturers. Efforts in some regions to create an operator-independent vehicle pool for public tenders will also provide potential for independent providers and manufacturers.

Currently no standard market structures are in sight globally and changes are slow.

Maintenance markets in other regions around the world differ considerably. In North America, South America and Australia, which are dominated by railfreight, vehicle manufacturers and independent suppliers have taken over a major share of maintenance. In passenger transport, manufacturers in Australia have set up joint ventures with operators for operating regional networks.

In the large countries of India, China and Russia, the markets are in national hands. While in India, Indian Railways carries out all works, in China, local vehicle manufacturers are responsible for inspections and refurbishments, in addition to Chinese Railways. In Russia a large-scale structural change is underway due to a number of (partial) privatisations.

Even in the long term, we expect continuous growth in the market for after-sales services. Manufacturers have particularly identified long-term maintenance contracts combined with vehicle deliveries as a growth segment in the after-sales business. On the one hand, they have signed contracts in established railway markets in Western Europe, Russia or Australia, while on the other hand, they are entering new markets such as Africa or South America through new development projects. Nonetheless, the market remains a local business for the most part with specific market conditions in some countries and can only be entered successfully when a number of basic conditions are taken into consideration.