Automotive electronics market to grow to $265 bn by 2018: study

01 Jul 2015


The Total OEM automotive electronics market and Tier1 suppliers is expected to grow to $265 billion by 2018, up from $204 billion in 2014, says a study on the automotive electronics R&D services market in India, with a specific focus on product engineering services, Automotive Electronics - Speeding on the Outsourcing Highway'', by management consulting firm Zinnov

Class A auto giants like Daimler, Audi, Jaguar & BMW and Tier-1 OEMs (Bosch, Denso, Continental and Delphi) are major outsourcers in the industry . Apart from Europe, the availability of large talent pool and the established R&D eco-system has made the Bay Area in the US, the R&D hub for automotive electronics.

According to the study the OEMs' major R&D focus areas are concentrated around advanced transmission systems, electric vehicles and hybrid vehicle technology. 

On the other hand, Tier-1 OEMs' R&D areas include Advanced Driver Assistance Systems (ADAS), Infotainment solutions and carrying out R&D on Autonomous Cars that are of Hybrid Version for creating a green environment. Additionally, it is witnessed that the number of embedded patents has grown up in the last 5 years along with the penetration of Service Providers in this space.

Embedded Patents Filed by Top OEMs in past 5 years
ADAS – 23%
Embedded Patents Filed by Top Tier 1s in past 5 years
ADAS – 25%

ADAS: Advanced Driver Assistance Systems

Talking about the growth opportunity, Sidhant Rastogi, partner and practice head, Zinnov said, ''Advanced Driver Assistance Systems and Infotainment Systems will see increased outsourcing and larger deals can be expected in next two three quarters.  The opportunities for service providers will continue to open up as we move towards a more connected world''.

The study brought to light that European Service Providers address the larger on-shore outsourcing piece when it comes to Automotive Electronics, whereas Indian service providers address a market of $320 million of the automotive electronics outsourcing market. It added that automotive electronics contributes 46 per cent of outsourcing deal value in auto industry and that 'Cockpit Electronics' was found to be the major outsourced sub-vertical in the recent past.

On the emerging growth opportunity in ADAS, the study highlighted that Heads Up Display, eCall Telematics and Lane Assist were the rapid growth areas. Outsourcing in mature activities will increase and OEMs will shift their focus on to adding new features to the mature activities. It also brought to light that Indian service providers have started to develop IP/ Framework in the emerging and growing areas.

Last but not the least; it added that products will continue to climb the S-Curve as OEMs realise ADAS as the differentiating factor and increase their R&D spend. It also recommended an attack plan for Service Providers, which said the following:

  • ADAS is the differentiating factor: Analysis of OEMs spending activity shows that they will continue to increase R&D spend on emerging areas of ADAS as they realize that going ahead it is going to be the differentiating factor among them
  • R&D investment lags product maturity curve: Within Driver Assistance major R&D investment by OEMs, Tier 1 suppliers and consumer electronics companies will majorly be in the products that lie in Emerging and Growing zone of the S-Curve
  • Building capability for emerging areas is the key: Service providers focus more on building frameworks/ capabilities for the products which lie in the Growing and Emerging zone as outsourcing will increase in these areas as they climb the S-curve

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