Vehicle manufacturers are increasingly focusing on the implementation of advanced technologies in vehicles. The megatrends of vehicle lightweighting, autonomous vehicles, connectivity services, and electrification of vehicles will transform the automotive industry. These trends would also create revenue generation opportunities for automotive engineering service providers.
The Automotive Engineering Services Market is projected to grow from USD 153.1 billion in 2019 to USD 384.6 billion by 2027, at a CAGR of 12.2%.
Recent Developments:
- In May 2019, FEV presented a new 48 V axle for use in light-duty municipal utility vehicles at Motor Symposium in Vienna. The axle is designed for use in light municipal utility vehicles such as sweepers or small dump trucks – to reduce their emissions in the city to zero. FEV’s concept is designed for use in components already available in the market and offers a solution that is as cost-effective and accessible as possible.
- In May 2019, Ricardo launched a VR application for global engineering collaboration at Vienna Motor Symposium. This immersive Virtual Reality (VR) application would allow multiple users in different geographical locations to carry out collaborative simultaneous engineering design reviews.
- In April 2019, Geely Auto Group (Geely), one of China’s leading automakers, partnered with Ricardo to develop advanced hybrid transmission that would be specifically designed for a range-extended plug-in hybrid.
- In March 2019, Altran and 47 other European partners unveiled an innovation lab called the European Institute of Innovation and Technology (EIT). This new facility is intended for research & innovation in urban mobility. The EIT Urban mobility community set objectives to launch 125 new products by 2026.
- In March 2019, AVL and MSC Software partnered for research and development in the field of simulation and testing of Autonomous Driving (AD) and Advanced Driver Assistance Systems (ADAS).
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The Asia Pacific is estimated to be the fastest-growing market for automotive engineering services during the forecast period. The increasing sales of electric vehicles and implementation of artificial intelligence during vehicle manufacturing are the major factors driving the growth of the automotive engineering services market in the region. Electric vehicles require a new driveline, battery technology, chassis design, and connectivity services. Also, the governments of several countries in the region are proactively building supporting infrastructure for electric vehicles. Governments are encouraging people to adopt electric vehicles to reduce carbon emission in urban areas. Government initiatives for emission-free transportation would increase the demand for advanced automotive engineering services during the forecast period.
North America is the second-fastest-growing market for automotive engineering services. Leading OEMs in North America have shifted focus toward advanced technologies and vehicle & passenger safety. The large customer base and high disposable income levels in the region have fueled the demand for premium connected vehicles, which in turn would boost the market for automotive engineering services in the future. Stringent safety regulations imposed by the National Highway Traffic Safety Administration have compelled OEMs to offer advanced safety features in vehicles. These regulations, combined with solid EV infrastructure, would drive the North American market. The US is the largest market in North America due to the high adoption of Robo-taxis and increasing sales of EVs.
The connectivity services segment is expected to be the fastest-growing market during the forecast period
The connectivity services segment is expected to be the fastest-growing market during the forecast period. The expansion of autonomous vehicle testing, advancements in artificial intelligence, and the introduction of 5G connectivity have increased the demand for connected services in automotive engineering services. Connectivity services help in controlling vehicle activities such as smart infotainment, vehicle diagnostics, parking assistance features, diagnostics, and others. OEMs are offering connectivity services in their vehicles. For instance, in July 2018, Audi entered into a partnership with Huawei, the largest telecommunications equipment and smartphone maker in China, for introducing connectivity features in upcoming vehicles. The Renault-Nissan-Mitsubishi Alliance plans to launch new vehicles with Alliance Connected Cloud in China by 2022. All these enhancements would accentuate the need for new sensors and use cases of IoT devices in the coming years. Thus, the automotive industry would witness an increasing demand for engineering service providers, specialized in connectivity services.
