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The Automotive Engineering Service Providers Market size is forecast to increase by USD 8.68 billion, at a CAGR of 8.2% between 2023 and 2028. The escalating demand for advanced vehicle connectivity solutions serves as a primary driver of market growth. This surge is expected to propel the global market forward, fueled by the increasing need for vehicle connectivity. Car manufacturers are committed to integrating ADAS (Advanced Driver Assistance Systems) into their vehicles, ensuring widespread adoption of connected cars in the future. A key factor shaping the market growth is the development of autonomous vehicles.
Autonomous cars are unmanned and navigate without human intervention by sensing their environment by leveraging devices like radar, a global positioning system (GPS), and ADAS. These cars are also known as self-driving cars, automated cars, or driverless cars. In addition, the highly complex working nature of autonomous cars has driven automotive companies and OEMs to pool their R&D resources to design and develop successful prototypes that have evolved to enhance their performance. The integration of advanced mechanical elements, electrical elements, and safety elements is crucial in ensuring the safety and efficiency of autonomous vehicles.
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The in-house segment is estimated to witness significant growth during the forecast period. In-house segment comprises performing testing, inspection, and certification (TIC) activities within companies instead of relying on outsourcing. In addition, in the case of in-house industries, including automotive TIC, automotive manufacturers themselves perform engineering services as a part of quality control and assurance, along with public bodies and organizations such as customs, competition authorities, and industrial health and safety authorities.
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The in-house segment was the largest segment and was valued at USD 7.97 billion in 2018. Moreover, automotive manufacturers invest in necessary in-house infrastructure, such as test and measurement equipment and skilled personnel, to perform activities in their manufacturing facilities, including in-house testing of the ECU and other core components. In addition, in-house help manufacturers have a higher level of control by keeping the services and personnel under their direct control. Hence, such factors are fuelling the growth of this segment which in turn will drive the market growth during the forecast period.
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APAC is estimated to contribute 30% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
Another region offering significant growth opportunities to companies is Europe. The growth of the market in Europe is fuelled by the presence of some leading global automakers, such as Mercedes-Benz AG (Mercedes-Benz), Volkswagen AG(Volkswagen), BMW AG(BMW), and AB Volvo (Volvo), which are pioneers in the automotive industry for the introduction of advanced technologies. In addition, most key market players, such as AVL List, EDAG, IAV GmbH, and Bertrandt (Bertandt), have their automotive R&D labs in Europe. Furthermore, countries such as France, Germany, Spain, and the UK will be the major contributors to the providers (ESP) market in Europe, due to the many high-end luxury and premium vehicles that are manufactured and marketed in these countries. Hence, such factors are driving the market growth in Europe during the forecast period.
The Automotive Engineering Service Providers (ESP) Market is experiencing robust growth driven by the escalating demand for advanced vehicle connectivity solutions and the development of autonomous vehicles. This trend underscores the importance of electronics elements and 5G networks in enabling seamless communication within vehicles and with external systems.
However, the industry faces challenges such as frequent changes in market dynamics, leading to an increase in order backlog for automotive engineering service providers. With a focus on OEMs (Original Equipment Manufacturers) and the growing prominence of electric vehicles and vehicle efficiency, ESPs play a crucial role in integrating technologies like collision avoidance sensors and connection sensors to enhance vehicle safety and performance. Moreover, advancements in software engineering, mechanical engineering, and electrical engineering are driving innovations in light weight vehicles/lightweight materials and fuel efficient vehicles, facilitating the transition towards digital vehicles and connected vehicles while addressing cybersecurity and data analytics concerns.
The escalating demand for advanced vehicle connectivity solutions serves as a primary driver of market growth. This surge is expected to propel the global market forward, fueled by the increasing need for vehicle connectivity. Car manufacturers are committed to integrating Automotive ESP Market Trends into their vehicles, ensuring widespread adoption of connected cars in the future.
Moreover, vehicle telematics systems accrue and transfer data regarding the vehicle's condition to service centers, fleet owners, and insurance providers. In addition, over the next decade, real-time highway alerts and notifications will be easily provided to the driver, and navigation systems will be able to direct the vehicle toward the least fuel-consuming route based on traffic density. Hence, such factors are positively impacting the market. Therefore, it is expected to drive the market growth during the forecast period.
A key factor shaping the market growth is the development of autonomous vehicles. Autonomous cars are unmanned and navigate without human intervention by sensing their environment by leveraging devices like radar, a global positioning system (GPS), and ADAS. These cars are also known as self-driving cars, automated cars, or driverless cars. In addition, the highly complex working nature of autonomous cars has driven automotive companies and OEMs to pool their R&D resources to design and develop successful prototypes that have evolved to enhance their performance.
Moreover, carmakers have partnered with technology companies to integrate vehicles with a certain level of artificial intelligence to create successful autonomous vehicles. For instance, Volvo, Volkswagen, Audi, BMW, General Motors, Ford, Apple Inc., and Google (a subsidiary of Alphabet Inc.) are a few of the stakeholders in the autonomous car market. Hence, the presence of such car makers is positively impacting the market. Therefore, it is expected to drive the market growth during the forecast period.
Frequent changes in market dynamics lead to an increase in order backlog is one of the key challenges hindering the market growth. The increasing technological innovations and dynamic consumer expectations have reduced the average lifecycle of vehicles, which is adding to the pressure faced by component suppliers and service providers to cater to the demands of automotive OEMs and their suppliers. For instance, in the past, the average shelf life of a vehicle model was 8-10 years.
However, the dramatic changes in the form of propulsion technologies, electrification, and engine downsizing have reduced the average shelf life to 4-6 years. As a result, this will negatively impact the global market as it places pressure on the entire value chain of the automotive industry. Hence, such factors are hindering the market growth during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Automotive Engineering Service Providers (ESP) Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, market growth and trends, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Adecco Group AG: The company offers automotive engineering service providers that support the development of digital products and evolution of manufacturing processes, and define new services for user behaviors.
The market growth analysis report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
In the Automotive Engineering Service Providers Market, companies play a crucial role in the automotive industry value chain by offering comprehensive engineering solutions encompassing designing, fabricating, and integrating mechanical, electrical, electronics, and software elements, software development. They navigate through the complex product lifecycle from conceptualization to production and assembling, ensuring the development of safe and efficient vehicles.
In the research-intensive automotive engineering field, service providers rely on mathematical formulas and models to optimize vehicle components, addressing concerns about security and ensuring a steady supply of components for planned production. Especially in the premium segment, where luxurious vehicles with reinforced frames cater to discerning customers, safety remains paramount to mitigate road accidents.
Digitalization is reshaping the market, offering efficient and convenient driving experiences while adhering to stringent safety regulations. Service providers must adapt to evolving customer awareness and deliver safe structured vehicles to meet expectations. The market report provides an analytical depiction of current trends and future estimations, identifying imminent investment pockets and restraints within the market scenario, facilitated by Porter's Five Forces Analysis and insights into the potency of buyers & suppliers and competitive intensity among leading market players in the passenger vehicles and commercial vehicles segments.
The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
Automotive Engineering Service Providers (ESP) Market Scope |
|
Report Coverage |
Details |
Page number |
181 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 8.2% |
Market Growth 2024-2028 |
USD 8.68 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
7.38 |
Regional analysis |
Europe, APAC, North America, South America, and Middle East and Africa |
Performing market contribution |
APAC at 30% |
Key countries |
US, China, Germany, France, and UK |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Adecco Group AG, Altair Engineering Inc., ASM Technologies Ltd., AVL List GmbH, Belcan LLC, Bertrandt AG, Capgemini Service SAS, EDAG Group, EPAM Systems Inc., FEV Group GmbH, HCL Technologies Ltd., Hitachi Ltd., IAV GmbH, KPIT Technologies Ltd., Magna International Inc., Mahindra and Mahindra Ltd., Onward Technologies Ltd., Ricardo Plc, Contechs Group Holdings Ltd., and L and T Technology Services Ltd. |
Market dynamics |
Parent market analysis,Market Forecasting , Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our market research and growth report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Application
7 Market Segmentation by Product Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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