Automotive Engineering Services Outsourcing Market size was valued at USD 72.24 Bn in 2023 and is expected to reach USD 352.21 Bn by 2031, and grow at a CAGR of 22.13% over the forecast period 2024-2031.
The future course of the Automotive Engineering Services Outsourcing (ESO) market hinges on transformative factors that will reshape demand and profitability for key players. One pivotal shift is the ascendance of electric vehicles (EVs), anticipated to witness exponential growth exceeding 30% by 2031 according to SNS Insider analysis. This necessitates expertise in critical areas such as battery technology, powertrain design, and lightweight materials, areas where traditional ESO providers may require substantial upskilling or strategic partnerships. The escalating emphasis on autonomous driving presents a significant opportunity estimated at USD 2 trillion by 2031.
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However, seizing this opportunity will demand proficiency in sensor fusion, artificial intelligence, and software development, potentially reshuffling the competitive landscape among ESO providers. Also, the increasing influence of megatrends such as Industry 4.0 will drive greater automation and data-centric decision-making within the ESO value chain. This trend may lead to the consolidation of smaller players lacking the resources to invest in advanced technologies and robust data analytics capabilities. In response to these evolving dynamics, ESO companies must adapt their service portfolios, talent acquisition strategies, and pricing models to effectively navigate the evolving profit landscape.
KEY DRIVERS:
Demand for innovative networking solutions is increasing.
Adoption of electric vehicles (EVs) and shared mobility for a better environment.
The rising demand for Luxury car.
The expanding demand for luxury automobiles is fueling a concurrent surge in the outsourcing of automotive engineering services. Notably, luxury car manufacturers such as Bentley and Aston Martin are increasingly delegating specialized engineering tasks, driven by a commitment to cutting-edge technology, personalized offerings, and superior performance.
Key drivers include the imperative for expertise in emerging fields such as electric and autonomous vehicle technologies. Outsourcing provides luxury car companies with access to a diverse global talent pool of engineers, allowing them to concentrate internal resources on reinforcing brand identity and core design principles. This strategic maneuver enables them to sustain leadership in innovation while delivering the unparalleled driving experience demanded by their discerning customer base.
RESTRAINTS:
Intellectual Property (IP) restriction
Change in business model, mainly new entrants entering with disruptive business models.
OPPORTUNITY:
Standardization of safety features.
Rise of autonomous vehicles.
Demand for outsourcing.
Implementation of stringent emission norms & environmental regulations.
Stringent emission regulations and environmental policies are proving highly effective in mitigating pollution levels. Notably, China's implementation of stricter vehicle emission standards in 2017 resulted in a significant 39% reduction in nitrogen oxide (NOx) emissions from new vehicles by 2022. Similarly, the European Union's Euro 6 standards, renowned for their stringent criteria, have led to an impressive 90% decrease in particulate matter emissions from new gasoline vehicles since their introduction in 2014.
These regulations are not only driving compliance but also fostering innovation in cleaner technologies within the automotive industry. For instance, the California Air Resources Board's ambitious zero-emission vehicle mandates have incentivized automakers to heavily invest in electric vehicle development. It is projected that global electric vehicle sales will surpass 10 million units by 2023 as a result of this push. While there may be initial cost implications for industries to adapt to these regulations, it's important to recognize that they pave the way for a cleaner and healthier future. Embracing these measures not only ensures compliance but also positions businesses as responsible stewards of the environment, aligning with evolving consumer preferences and regulatory mandates.
CHALLENGES:
Competition is fierce.
High-risk investments
Threats to security
Stringent emission regulations and environmental policies are proving highly effective in mitigating pollution levels. Notably, China's implementation of stricter vehicle emission standards in 2017 resulted in a significant 39% reduction in nitrogen oxide (NOx) emissions from new vehicles by 2021. Similarly, the European Union's Euro 6 standards, renowned for their stringent criteria, have led to an impressive 90% decrease in particulate matter emissions from new gasoline vehicles since their introduction in 2014.
These regulations are not only driving compliance but also fostering innovation in cleaner technologies within the automotive industry. For instance, the California Air Resources Board's ambitious zero-emission vehicle mandates have incentivized automakers to heavily invest in electric vehicle development. It is projected that global electric vehicle sales will surpass 10 million units by 2023 as a result of this push. While there may be initial cost implications for industries to adapt to these regulations, it's important to recognize that they pave the way for a cleaner and healthier future. Embracing these measures not only ensures compliance but also positions businesses as responsible stewards of the environment, aligning with evolving consumer preferences and regulatory mandates.
An economic downturn is negatively impacting on the Automotive Engineering Services Outsourcing (ESO) market. Decreased consumer spending results in lower car sales, prompting Original Equipment Manufacturers (OEMs) to implement budgetary constraints. Consequently, there's a reduction in outsourced engineering projects, directly impacting ESO providers. This was evident during the 2020 recession when global automotive production plummeted by 15.8%, leading to a decline in ESO firms' sales due to project delays or cancellations.
However, certain segments within the ESO industry may experience a mitigating effect. The increasing demand for electric vehicles (EVs) and stringent emission regulations necessitate specialized engineering skills. ESO providers equipped with expertise in these areas can attract clients seeking to optimize expenses while navigating intricate technologies. For instance, some companies are prioritizing the upskilling of their workforce in EV engineering to meet this burgeoning market need. Through strategic adaptation of services and targeted focus on specific market segments, ESO players can effectively navigate economic downturns and emerge resilient.
By Application:
In 2023, the powertrain and after treatment category had the highest revenue share of the automotive ESO market. This is due to the electrification of powertrains as a replacement for internal combustion engines fueled by petroleum and gasoline, which can reduce the environmental effect of carbon emissions. OEM investments in powertrain technology are expected to have a beneficial influence on the growth of the powertrain and after treatment industry. Furthermore, because to its capacity to perceive and recognize its surroundings and provide safe mobility, the adoption of autonomous driving/ADAS is predicted to expand significantly throughout the projection period. ADAS is made up of a variety of sensors, including as lidar, GPS, radar, inertial measurement units, and others, which give enhanced sensory information and control systems to help you navigate.
By Service:
The prototype segment had the highest revenue share and is likely to lead the automotive ESO market during the forecast period. This is due to the automobile industry's growing use of 3D printing technology to create a prototype of an assembly, specific pieces, or a whole car model. Manufacturers may use 3D printing technology to swiftly discover flaws in prototypes and implement remedial steps, resulting in a more cost-effective strategy. As ESPs engage in the development of new test centres in an attempt to expand and fulfil the expanding demand for automotive testing, the testing category is predicted to account for the quickest growth, achieving a CAGR throughout the forecasted years.
By Location:
The on-shore category had the most revenue share of the entire market and is predicted to expand the quickest throughout the forecast period. This is due to OEMs' growing desire to work with locally accessible ESPs. This will aid in avoiding the risk, as many nations do not adhere to intellectual property copyright regulations. The obstacles encountered while working with ESPs from a foreign area, such as various time zones, language hurdles, enforced rules and regulations, and others, limit OEMs' preference for outsourcing from other countries, resulting in a considerable rise in demand for the on-shore market. During the projection period, the off-shore segment is predicted to increase significantly. This is due to OEMs' growing preference for outsourcing services to low-cost nations such as India, China, Brazil, Mexico, and Ukraine. With the highest number of engineering graduates and suitable capabilities among all low-cost nations for ESO, India is heavily favored by OEMs, fueling growth in this area.
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By Application
Autonomous Driving/ADAS
Body & Chassis
Powertrain and After-treatment
Infotainment & Connectivity
Others
By Service
Designing
Prototyping
System Integration
Testing
Others
By Location
On-shore
Off-shore
By Vehicle Type
Passenger cars
Commercial vehicles
REGIONAL ANALYSIS:
The landscape of automotive engineering services promises a positive outlook in the future, with distinct regions occupying prominent positions. As of 2023, Asia-Pacific surged ahead, commanding an impressive 46.11% of the global market share, according to SNS Insider. This dominance is largely attributed to factors such as rapid economic expansion and a burgeoning middle class with an appetite for new automobiles. Following closely behind is Europe, holding a significant portion of the market approx. of 25.20%.
While currently not leading, North America is poised to accelerate into a fast lane in the foreseeable future. Our research forecasts a robust CAGR of 20.21% for this region. North America boasts a rich automotive manufacturing heritage, with car production being a cornerstone of its economy. The United States, in particular, acts as a high-powered engine propelling this growth trajectory. Government incentives promoting electric vehicles (EVs) and the drive for energy-efficient automobiles are catalyzing a surge in demand, thus creating fertile ground for automotive engineering services. Furthermore, the promising prospect of self-driving vehicles serves as another significant growth catalyst. With its well-established automotive industry ramping up Research and Development (R&D) investments, the US stands poised to emerge as a key market leader in North America.
REGIONAL COVERAGE:
North America
USA
Canada
Mexico
Europe
Germany
UK
France
Italy
Spain
The Netherlands
Rest of Europe
Asia-Pacific
Japan
south Korea
China
India
Australia
Rest of Asia-Pacific
The Middle East & Africa
Israel
UAE
South Africa
Rest of Middle East & Africa
Latin America
Brazil
Argentina
Rest of Latin America
The major key players are Alten Group, Altran, ARRK Product Development Group Ltd., ASAP Holding Gmbh, AVL List GmbH, Bertrandt AG, EDAG Group, ESG Elektroniksystem- und Logistik-GmbH, FEV Group GmbH, and Horiba, LTD.
RECENT DEVELOPMENTS:
Alten Group, with its keen eye for expansion, has been augmenting its global reach through a series of calculated acquisitions and symbiotic partnerships. Among its notable conquests are Calsoft Labs, a venerated name in technology consulting within the automotive domain, and Cyient Europe Ltd., a stalwart in European engineering consultancy. These acquisitions serve as pillars upon which Alten fortifies its position in the ever-evolving automotive landscape.
Bertrandt AG has been carving its niche by sharpening its focus on the vanguards of automotive evolution: electric mobility, autonomous driving, and digitalization. Their collaborative endeavors with automotive titans underscore their commitment to pioneering innovative solutions for the mobility of tomorrow. Through a relentless pursuit of expertise and a penchant for cutting-edge projects, Bertrandt stands as a beacon of innovation in the automotive sphere.
At the forefront of engineering prowess stands AVL List GmbH, a stalwart in crafting advanced solutions for the automotive industry's most pressing challenges. With a laser focus on powertrain electrification, vehicle integration, and autonomous driving technologies, AVL remains poised to redefine the automotive landscape. Their global footprint expands through strategic collaborations with automotive juggernauts and esteemed research institutions, solidifying their status as trailblazers in automotive engineering.
Report Attributes | Details |
---|---|
Market Size in 2023 | US$ 72.24 Billion |
Market Size by 2031 | US$ 351.21 Billion |
CAGR | CAGR of 22.13% From 2024 to 2031 |
Base Year | 2023 |
Forecast Period | 2024-2031 |
Historical Data | 2020-2022 |
Report Scope & Coverage | Market Size, Segments Analysis, Competitive Landscape, Regional Analysis, DROC & SWOT Analysis, Forecast Outlook |
Key Segments | • by Application (Autonomous Driving/ADAS, Body & Chassis, Powertrain and After-treatment, Infotainment & Connectivity, and Others) • by Basis of Service (Designing, Prototyping, System Integration, Testing, and Others) • by Location (On-shore and Off-shore) • by Vehicle Type (Passenger cars and Commercial vehicles) |
Regional Analysis/Coverage | North America (USA, Canada, Mexico), Europe (Germany, UK, France, Italy, Spain, Netherlands, Rest of Europe), Asia-Pacific (Japan, South Korea, China, India, Australia, Rest of Asia-Pacific), The Middle East & Africa (Israel, UAE, South Africa, Rest of Middle East & Africa), Latin America (Brazil, Argentina, Rest of Latin America) |
Company Profiles | Alten Group, Altran, ARRK Product Development Group Ltd., ASAP Holding Gmbh, AVL List GmbH, Bertrandt AG, EDAG Group, ESG Elektroniksystem- und Logistik-GmbH, FEV Group GmbH, and Horiba, LTD. |
Key Drivers | •Sanctioned Protocol Implementation to Comply with Cloud Storage Regulations. •Increase in the Number of Cloud-Based Services Transitions. •The spread of video and rich media on social media sites. |
RESTRAINTS | Intellectual Property (IP) restriction Change in business model |
Ans: - Automotive Engineering Services Outsourcing Market size was valued at USD 72.24 Bn in 2023 and is expected to reach USD 341.21 Bn by 2031.
Ans: - Adoption of electric vehicles (EVs) and shared mobility for a better environment.
Ans: - 4 segments of the Automotive Engineering Services Outsourcing market.
Ans. The primary growth tactics of Automotive Engineering Services Outsourcing market
participants include merger and acquisition, business expansion, and product launch.
Ans: - Key Stakeholders Considered in the study are Raw material vendors, Regulatory authorities, including government agencies and NGOs, Commercial research, and development (R&D) institutions, Importers and exporters, etc.
TABLE OF CONTENTS
1. Introduction
1.1 Market Definition
1.2 Scope
1.3 Research Assumptions
2. Industry Flowchart
3. Research Methodology
4. Market Dynamics
4.1 Drivers
4.2 Restraints
4.3 Opportunities
4.4 Challenges
5. Impact Analysis
5.1 Impact of Russia-Ukraine Crisis
5.2 Impact of Economic Slowdown on Major Countries
5.2.1 Introduction
5.2.2 United States
5.2.3 Canada
5.2.4 Germany
5.2.5 France
5.2.6 UK
5.2.7 China
5.2.8 Japan
5.2.9 South Korea
5.2.10 India
6. Value Chain Analysis
7. Porter’s 5 Forces Model
8. Pest Analysis
9. Automotive Engineering Services Outsourcing Market Segmentation, by Application
9.1 Introduction
9.2 Trend Analysis
9.3 Autonomous Driving/ADAS
9.4 Body & Chassis
9.5 Powertrain and After-treatment
9.6 Infotainment & Connectivity
9.7 Others
10. Automotive Engineering Services Outsourcing Market Segmentation, by Service
10.1 Introduction
10.2 Trend Analysis
10.3 Designing
10.4 Prototyping
10.5 System Integration
10.6 Testing
10.7 Others
11. Global Automatic number plate recognition system Market Segmentation, by Application
11.1 Introduction
11.2 Trend Analysis
11.3 On-shore
11.4 Off-shore
12. Automotive Engineering Services Outsourcing Market Segmentation, by Vehicle Type
12.1 Introduction
12.2 Trend Analysis
12.3 Passenger cars
12.4 Commercial vehicles
13. Regional Analysis
13.1 Introduction
13.2 North America
13.2.1 USA
13.2.2 Canada
13.2.3 Mexico
13.3 Europe
13.3.1 Eastern Europe
13.3.1.1 Poland
13.3.1.2 Romania
13.3.1.3 Hungary
13.3.1.4 Turkey
13.3.1.5 Rest of Eastern Europe
13.3.2 Western Europe
13.3.2.1 Germany
13.3.2.2 France
13.3.2.3 UK
13.3.2.4 Italy
13.3.2.5 Spain
13.3.2.6 Netherlands
13.3.2.7 Switzerland
13.3.2.8 Austria
13.3.2.9 Rest of Western Europe
13.4 Asia-Pacific
13.4.1 China
13.4.2 India
13.4.3 Japan
13.4.4 South Korea
13.4.5 Vietnam
13.4.6 Singapore
13.4.7 Australia
13.4.8 Rest of Asia Pacific
13.5 The Middle East & Africa
13.5.1 Middle East
13.5.1.1 UAE
13.5.1.2 Egypt
13.5.1.3 Saudi Arabia
13.5.1.4 Qatar
13.5.1.5 Rest of the Middle East
13.5.2 Africa
13.5.2.1 Nigeria
13.5.2.2 South Africa
13.5.2.3 Rest of Africa
13.6 Latin America
13.6.1 Brazil
12.6.2 Argentina
13.6.3 Colombia
13.6.4 Rest of Latin America
14. Company Profiles
14.1 Alten Group
14.1.1 Company Overview
14.1.2 Financial
14.1.3 Products/ Services Offered
14.1.4 SWOT Analysis
14.1.5 The SNS View
14.2 Altran
14.2.1 Company Overview
14.2.2 Financial
14.2.3 Products/ Services Offered
14.2.4 SWOT Analysis
14.2.5 The SNS View
14.3 ARRK Product Development Group Ltd.
14.3.1 Company Overview
14.3.2 Financial
14.3.3 Products/ Services Offered
14.3.4 SWOT Analysis
14.3.5 The SNS View
14.4 ASAP Holding Gmbh
14.4.1 Company Overview
14.4.2 Financial
14.4.3 Products/ Services Offered
14.4.4 SWOT Analysis
14.4.5 The SNS View
14.5 AVL List GmbH
14.5.1 Company Overview
14.5.2 Financial
14.5.3 Products/ Services Offered
14.5.4 SWOT Analysis
14.5.5 The SNS View
14.6 Bertrandt AG
14.6.1 Company Overview
14.6.2 Financial
14.6.3 Products/ Services Offered
14.6.4 SWOT Analysis
14.6.5 The SNS View
14.7 EDAG Group
14.7.1 Company Overview
14.7.2 Financial
14.7.3 Products/ Services Offered
14.7.4 SWOT Analysis
14.7.5 The SNS View
14.8 ESG Elektroniksystem- und Logistik-GmbH
14.8.1 Company Overview
14.8.2 Financial
14.8.3 Products/ Services Offered
14.8.4 SWOT Analysis
14.8.5 The SNS View
14.9 FEV Group GmbH
14.9.1 Company Overview
14.9.2 Financial
14.9.3 Products/ Services Offered
14.9.4 SWOT Analysis
14.9.5 The SNS View
14.10 Others
14.10.1 Company Overview
14.10.2 Financial
14.10.3 Products/ Services Offered
14.10.4 SWOT Analysis
14.10.5 The SNS View
15. Competitive Landscape
15.1 Competitive Benchmarking
15.2 Market Share Analysis
15.3 Recent Developments
15.3.1 Industry News
15.3.2 Company News
15.3.3 Mergers & Acquisitions
16. Use Case and Best Practices
17. Conclusion
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