Automotive electronics market to exceed US$50 billion in 2010

Oxford, UK, September 2006

The world market for non-entertainment automotive electronics was estimated at US$36.8 billion in 2005 and is forecast to reach US$52.1 billion by 2010, according to the latest figures from Reed Electronics Research. Growth is forecast across all product segments and regions with the strongest demand coming from the emerging markets in Asia and East and Central Europe

North America will show an average increase of 5.1% per year in the period to 2010, with the market increasing from US$13.2 billion in 2005 to reach US$16.9 billion in 2010. Although North America is a mature market for a number of automotive electronic systems strong growth will be seen for electronic braking, steering and driver information.

Other Findings from the research include:

Powertrain electronics accounted for 32% of the global market in 2005 with this forecast to remain stable in the period to 2010. Growth will be in line with car production the market boosted by strong demand from the Rest of the World region. The powertrain market will continue to face significant pricing pressure, in particular, in the mature markets although this should be partially offset by the requirement for increased processing power to meet more stringent legislation.

Body/chassis electronics will show an average growth of 9.4% per year between 2005 and 2010, with the world market increasing from US$4.0 billion to US$6.3 billion during the period. The trend to fully integrated systems will continue throughout the forecast period as manufacturers look to improve performance and reduce overall system cost.

The market for passive restraint will continue to show volume growth, in particular, for side impact airbags. Rollover protection and other airbags will also show increased market penetration. Smart airbags should increase market penetration throughout the forecast period, growth in North America boosted by the introduction of legislation.

Overall safety and convenience accounted for 50.3% of the global market in 2005 at US$18.5 billion. Body controllers, multiplexing/electrical distribution and navigation will all show strong growth during the period. The market for navigation will continue to converge with audio and entertainment and combined will be one of the fastest growing segments of the automotive electronics market. Driver assistance systems such as collision avoidance, night vision and lane departure warning will also show strong growth, albeit from a low-base.

Automotive manufacturers and their suppliers have been going through a period of significant change and consolidation, a trend which is expected to continue and across all tiers of the industry. Recent examples include Continental’s acquisition of Motorola’s automotive electronics business; Valeo’s acquisition of Johnson Control’s engine controls business; and Siemens VDO’s acquisition of DaimlerChrysler’s Huntsville Electronics. As automakers reduce the number of suppliers so will the leading systems companies fuelling further consolidation.

Although system suppliers have tended to locate close to the automaker in today’s environment system and component suppliers are looking to reduce costs by moving production where possible to lower cost locations. European and Japanese suppliers have to some extent been shielded by the full impact of high-costs and pricing pressure by establishing long-term relationships with the respective indigenous manufacturers. In contrast North American suppliers are battling high wage and pension costs, which have resulted in a number of high-profile bankruptcies.

Automotive Electronics – A profile of International Markets and Suppliers to 2007 provides a detailed analysis of the automotive electronics market highlighting the key growth areas as well as a providing a comprehensive overview of the key system suppliers to this important growth market.

The market figure includes minivans, pick-up trucks and sport-utility vehicles in North America but excludes where possible the value of individual sensors, infotainment (including communications) and commercial vehicle electronics.