Automotive Engineering Services Market | MarketsandMarkets

Automotive Engineering Services Market |  MarketsandMarkets

Automotive Engineering Services deals with the design and development of automotive components and related technologies to address complex technical challenges in the vehicle development value chain. The engineering service process begins with conceptualization, design, prototyping, system integration, and testing. Automotive engineering services include vehicle connectivity services, ADAS (advanced driver assistance systems) and safety systems, interior and exterior design and body engineering services, passenger comfort, and others. These services evaluate different areas on a vehicle and provide data to verify the development and validation of a vehicle.

The automotive engineering services market is forecast to grow at a CAGR of 8.8%, from $153.3 billion in 2021 to $253.9 billion in 2027.

The growth of the automotive engineering services market is driven by increasing sales of electric vehicles, increased investments in R&D in the automotive industry, the advent of autonomous vehicles, and the high implementation of connectivity services.

The automotive engineering services market is dominated by global players such as Capgemini (France), IAV Automotive Engineering (Germany), Tech Mahindra (India), AKKA Technologies (Belgium), and Bertrandt AG (Germany).

In-house engineering services are expected to be the largest market. Major OEMs keep complicated automotive engineering services such as engine design, powertrain design, and transmission systems for in-house development. These designs and optimizations vary from OEM to OEM and therefore require different techniques and expertise that can be done in-house for best results. Additionally, the increasing focus on zero emission vehicles has forced OEMs to redesign their existing engines to meet the latest emissions standards. The design of electric vehicles would increase the demand for internal investment by OEMs.

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Automotive electrical, electronic and body controls have a high value-added share in vehicle development. Electronic and electrical systems play a crucial role in managing all the functions dedicated to passenger comfort and convenience. Services in automotive electrical and electronics include power management module, climate control, power windows, body control module, and smart wipers and mirrors. The trend is expected to grow due to the adoption of electric vehicles and complex electronic components for a safer and more functional driving experience. Service providers such as L&T Technology Services and FEV have invested enormous resources to develop electrical, electronic and body control solutions in automotive engineering services.

Asia Pacific is the fastest growing market for automotive engineering services due to the high adoption of electric passenger cars, especially in China. The markets of South Korea, India and Japan are also growing due to the policies and mandates instituted by their respective governments to reduce emission levels and increase the use of green technology. Japan accounts for the majority of the automotive engineering services market in the Asia Pacific region. Many governments in the region plan to replace their existing public fleets with electric vehicles in the future. The rapid growth of the logistics segment is also driving the demand for commercial electric vehicles, consequently increasing the demand for automotive engineering services.

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Many engineering service providers are also planning their organic and inorganic investments in Asia Pacific, thus creating growth opportunities for the market in the region. For example, in May 2019, FEV opened a new mobility center in Pune to expand its presence in India. The new mobility center would pave the way for advanced technologies in the Indian market. In April 2019, Ricardo and Geely Auto Group (Geely), one of China’s leading automakers, partnered to develop an advanced hybrid transmission, which would be designed specifically for a range-extended plug-in hybrid.

The presence of OEMs such as VDL Groep (The Netherlands) and AB Volvo (Sweden) offer growth opportunities for the automotive engineering services market in the region. European automotive companies dominate the global landscape, accounting for almost 50% of R&D spending led by companies such as BMW, Continental and Daimler. Increasingly stringent regulations related to environmental issues are encouraging market players to test and develop advanced vehicles, further driving the market for automotive engineering services.

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