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The Automotive Engineering Service Provider market is influenced by a myriad of market factors that collectively shape its dynamics and trajectory. One of the primary drivers is the continuous evolution of automotive technologies. The automotive industry is undergoing rapid technological advancements, including the development of electric vehicles (EVs), autonomous driving systems, connectivity features, and advanced driver assistance systems (ADAS). As automakers strive to stay competitive in this dynamic landscape, they increasingly rely on specialized engineering service providers to bring these cutting-edge technologies to market. The demand for expertise in electric propulsion, software development, sensor integration, and safety systems is propelling the growth of automotive engineering service providers.
Global regulations and emission standards are also significant factors impacting the market. Governments worldwide are imposing stringent regulations to curb emissions and promote environmental sustainability. This has led to a growing emphasis on the development of fuel-efficient vehicles, alternative propulsion systems, and overall lightweighting of vehicles. Automotive engineering service providers play a crucial role in helping manufacturers meet these regulatory requirements by providing solutions that enhance fuel efficiency, reduce emissions, and optimize vehicle performance.
Cost considerations are paramount in the automotive industry, and outsourcing engineering services has become a strategic move for many OEMs (Original Equipment Manufacturers) and Tier 1 suppliers. Outsourcing allows companies to access specialized skills without the need for significant in-house investments. Automotive engineering service providers, equipped with domain expertise, can offer cost-effective solutions, contributing to the overall competitiveness of automotive manufacturers in a challenging market.
The increasing complexity of vehicle architectures and the rising demand for interconnected features drive the need for robust cybersecurity solutions in the automotive sector. Automotive engineering service providers are responding to this challenge by offering cybersecurity services to safeguard connected vehicles from potential cyber threats. As vehicles become more connected and reliant on software-driven functionalities, the role of engineering service providers in ensuring the security and integrity of automotive systems becomes paramount.
Market consolidation and strategic partnerships are shaping the competitive landscape of automotive engineering services. The industry has witnessed mergers and acquisitions as well as collaborations between engineering service providers and automotive companies. These partnerships aim to create synergies, pool resources, and enhance capabilities to address the multifaceted challenges posed by the evolving automotive landscape. Collaborations between traditional automakers, tech companies, and engineering service providers are becoming more prevalent, reflecting the interdisciplinary nature of modern automotive development.
The global supply chain dynamics also impact the automotive engineering service provider market. Disruptions in the supply chain, as experienced during the COVID-19 pandemic, underscore the importance of resilient and adaptable supply networks. Automotive engineering service providers need to navigate these challenges by establishing flexible supply chain strategies, ensuring a stable flow of components, and leveraging digital technologies to enhance supply chain visibility and agility.
Environmental sustainability is increasingly becoming a key consideration in the automotive industry, influencing consumer preferences and industry practices. As a result, there is a growing demand for engineering services that support the development of eco-friendly technologies, such as electric and hydrogen-powered vehicles. Automotive engineering service providers that can contribute to the green transition by offering innovative solutions for sustainable mobility are well-positioned to capitalize on this market trend.
The Automotive Engineering Service Provider market is intricately linked to the dynamic forces shaping the automotive industry. From technological advancements and regulatory pressures to market consolidation and sustainability concerns, these factors collectively define the landscape in which engineering service providers operate. As the automotive sector continues to evolve, the role of engineering service providers remains crucial in supporting manufacturers to stay competitive, innovative, and adaptive in a rapidly changing market.
Covered Aspects:
| Report Attribute/Metric | Details |
|---|---|
| Segment Outlook | Service, Application, Vehicle Type and Region |
Automotive Engineering Service Provider Market Highlights:
Automotive Engineering Service Provider Market Overview:
Global Automotive Engineering Service Provider Market Size was valued at USD 172.5 Billion in 2023. The Automotive Engineering Service Provider Market industry is projected to grow from USD 186.3 Billion in 2024 to USD 319.4 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 6.97% during the forecast period (2024- 2032). The growing interest in connected auto technologies, as well as the rising demand for environmentally friendly and fuel-efficient vehicles are the key market drivers enhancing the market growth.
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Automotive Engineering Service Provider Market Trends
Rising Automotive Demand for Connected Services to Drive Market Growth
Market CAGR for automotive engineering service provider is being driven by the rising automotive demand for connected services. Customers can remotely monitor and manage their cars via the manufacturer's mobile app when connected services are integrated into their vehicles. With the use of this phone, the user may quickly locate their vehicles. Using connected services technology, the user may also check the mileage of the vehicle, unlock the doors, and preheat the battery. With unique mobile applications and functionalities, connected services vary by automobile manufacturer. Audi, for example, offers a connected service called Audi Connect, as well as a smartphone app called my Audi.
As a result, the development of linked services in accordance with OEM specifications is expected to drive the growth of the automotive engineering services market over the forecast period. The table below lists some of the mobile-connected services. Companies like WirelessCar are working to accelerate the development of connected vehicle technologies.
For instance, in July 2022, the WirelessCar is developing an Android Automotive Operating System with the assistance of Polester. With this, WirelessCar developed connected data services like Journey Log, which stores data in the WirelessCar cloud with all the track details of each journey taken. WirelessCar will work with Polester to accelerate the development of linked technologies, which assist will promote the market expansion of automotive engineering services.
The increasing demand for advanced driver assistance systems (ADAS) and connected automobile technologies is one of the factors driving the growth of the Automotive Engineering Service Provider Market. As these technologies become more common in modern automobiles, automotive engineering service providers are playing a growing role in assisting manufacturers in designing and developing these systems. Lane departure warning, adaptive cruise control, and blind spot recognition are examples of ADAS technologies that are becoming more widespread in new vehicles, and many buyers are ready to pay a premium for these features. Furthermore, linked car technologies such as infotainment systems and vehicle-to-vehicle communication are gaining popularity, driving demand for automotive engineering services even higher.
Automotive engineering service providers are projected to play an increasingly vital role in the industry as demand for these technologies grows. These service providers provide a variety of services, such as design, testing, and validation, and are critical in assisting automakers in bringing new products to market swiftly and efficiently.
Moreover, the growing demand for electric cars (EVs) and hybrid electric vehicles (HEVs) is another factor driving the growth of the Automotive Engineering Service Provider Market. As more people opt for electric and hybrid vehicles, automotive engineering service providers play an important role in assisting manufacturers in designing and developing these vehicles.
As an example, engineering service providers can assist automakers in designing and optimizing battery management systems, which are crucial to EV and HEV performance and safety. They can also aid with the development of electric powertrains, which are critical to these vehicles' performance and efficiency.
Automotive Engineering Service Provider Market Segment Insights:
Automotive Engineering Service Provider Service Insights
The global Automotive Engineering Service Provider Market segmentation, based on Service includes engine, chassis, transmission, car and BIW, seating systems, cooling and HVAC, interior and exterior trims and others. The engine category has a considerable market share since it involves the design and engineering of the vehicle's engine and drivetrain components.
Automotive Engineering Service Provider Application Insights
The global Automotive Engineering Service Provider Market segmentation, based on Application, includes mechanical, electrical & electronics, software, safety. The mechanical category currently dominates and is predicted to continue to dominate in 2032. The extremely competitive character of the automobile business can be credited to the segment's growth; by applying prototyping techniques in mechanical manufacturing-related services, firms can produce correct outcomes in shorter production times, hence decreasing extra expenses. Given the continued trend of end-user convenience, automobile manufacturers are investing in developing their manufacturing practices to match the trend, which is why mechanical vehicles are likely to dominate in the future.
Figure1: Global Automotive Engineering Service Provider Market, by Application, 2022 & 2032 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Automotive Engineering Service Provider Vehicle Type Insights
The global Automotive Engineering Service Provider Market segmentation, based on vehicle type, includes passenger car, commercial vehicle, and two-wheeler. The passenger car category now leads the Automotive Engineering Service Provider Market. This is owing to the increased demand for passenger automobiles around the world, as well as the increasing complexity of automotive systems and the need for specialized engineering expertise.
Automotive Engineering Service Provider Regional Insights
By region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The North American Automotive Engineering Service Provider Market area will dominate this market, due to rising demand for electric and hybrid vehicles, as well as a greater emphasis on safety and emissions rules in the region, are all contributing to the region's growing emphasis on safety and emissions standards.
Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.
Figure2: Global Automotive Engineering Service Provider Market Share By Region 2022 (Usd Billion)
Source: Secondary Research, Primary Research, MRFR Database and Analyst Review
Europe Automotive Engineering Service Provider Market accounts for the second-largest market share due to rising investments in automotive electrification and autonomous technology. Further, the German Automotive Engineering Service Provider Market held the largest market share, and the UK Automotive Engineering Service Provider Market was the fastest growing market in the European region
The Asia-Pacific Automotive Engineering Service Provider Market is expected to grow at the fastest CAGR from 2024 to 2032. This is due to the growing adoption of EVs in the region. Moreover, China’s Automotive Engineering Service Provider Market held the largest market share, and the Indian Automotive Engineering Service Provider Market was the fastest growing market in the Asia-Pacific region.
Automotive Engineering Service Provider Key Market Players & Competitive Insights
Leading market players are investing heavily in research and development in order to expand their product lines, which will help the Automotive Engineering Service Provider Market, grow even more. Market participants are also undertaking a variety of strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, Automotive Engineering Service Provider industry must offer cost-effective items.
Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the global Automotive Engineering Service Provider industry to benefit clients and increase the market sector. In recent years, the Automotive Engineering Service Provider industry has offered some of the most significant advantages to medicine. Major players in the Automotive Engineering Service Provider Market, including HARMAN International (USA), EDAG Engineering GmbH (Germany), IAV Automotive Engineering, Inc. (Germany), Magna International Inc (Canada), Imaginative Automotive Engineering Services (India) and others, are attempting to increase market demand by investing in research and development operations.
Harman International Industries, or just Harman, is an American audio electronics manufacturer. The company has been operating as an independent subsidiary of Samsung Electronics. In September 2022, Harman International (Harman) has announced the debut of its new Ready Care service, which identifies driver behaviour and gives solutions for safer driving. To increase driver safety, it provides solutions such as Cognitive Distraction, Stress-Free Routing, and Personalized Comfort, in addition to Herman's connected car solutions.
FEV India Pvt. Ltd. is a subsidiary of FEV Group, a German-based global engineering services supplier. The company offers design and development, testing and validation, and system integration services for the automotive and transportation industries. FEV India was founded in 2008 and is based in Pune, India. A team of experienced engineers and technicians collaborates directly with clients to develop creative solutions for a variety of automotive and transportation applications. In April 2022, FEV introduced the FEV io Intelligent Mobility Software, which combines the company's expertise in intelligent mobility, software development, and novel power solutions. As part of this offering, ADAS and connection services for the automobile industry will be provided in an all-inclusive software suite.
Key Companies in the Automotive Engineering Service Provider market include
- Continental AG (Germany)
- AVL LIST GmbH (Germany)
- Robert Bosch GmbH (Germany)
- Bertrandt (Germany)
- HARMAN International (USA)
- EDAG Engineering GmbH (Germany)
- IAV Automotive Engineering, Inc. (Germany)
- Magna International Inc (Canada)
- Imaginative Automotive Engineering Services (India)
- Contechs (UK).
Automotive Engineering Service Provider Industry Developments
June 2021, IAV and the Massachusetts Institute of Technology (MIT) have begun a joint research project for alternative propulsion systems, comparing and assessing various drive types based on hydrogen, electrification, hybridization, and methane combustion in heavy-duty vehicles.
September 2022, Tech Mahindra launched YANTRA.Al, a cognitive Al solution, to expand the company's automotive solution portfolio and deliver insights to enterprise partners for better field service planning and execution.
August 2022, AVL has introduced a new inverter test system service for testing inverters from e-motors and batteries, as well as providing representation of safety-related reactions with standard criteria. The testing will give a thorough validation of inverter function.
Automotive Engineering Service Provider Market Segmentation:
Automotive Engineering Service Provider Market By Service Outlook
- Engine
- Chassis
- Transmission
- Car And BIW
- Seating Systems
- Cooling And HVAC
- Interior And Exterior Trims
- Others
Automotive Engineering Service Provider Market By Application Outlook
- Mechanical
- Electrical & Electronics
- Software
- Safety
Automotive Engineering Service Provider Market By Vehicle Type Outlook
- Passenger Car
- Commercial Vehicle
- Two-Wheeler
Automotive Engineering Service Provider Regional Outlook
- North America
- US
- Canada
- Europe
- Germany
- France
- UK
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- Australia
- South Korea
- Australia
- Rest of Asia-Pacific
- Rest of the World
- Middle East
- Africa
- Latin America
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