|Study Period:||2018 - 2026|
|Fastest Growing Market:||Asia Pacific|
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The Automotive Engineering Services Outsourcing Market was valued at 76 billion in 2020, and it is projected to reach USD 253.9 billion by 2026, registering a CAGR of 27.5% from 2021 to 2026.
The COVID-19 outbreak has affected many industries across the world. Many countries imposed a complete lockdown for few months because of the COVID-19 pandemic, which hampered the production of vehicles. Vehicle sales took a hit as manufacturing sites throughout the world were shut down. The impact of the pandemic was moderate on the automotive engineering services market. However, most automakers have resumed vehicle manufacturing with limited capacity and the safety measures in place. The market is expected to grow positively during the forecast period as economies are slowly recovering in the post-pandemic period.
The market is expected to be driven by the growing technological skills of Engineering Service Providers (ESPs) to offer R&D and product innovation in their products and solutions, OEM and government concentration on electric vehicles, innovative technologies with respect to vehicle and passenger safety, lightweight vehicles, etc.
However, the market faces challenges from restraining factors like the high cost of engineering services and technological limitations, which can affect market growth.
Scope of the Report
The automotive engineering services outsourcing market is segmented by application type, location type, vehicle type, propulsion type, and geography.
The Automotive Engineering Services Outsourcing Market is segmented by Application Type into Designing, Prototyping, System Integration, and Testing. By Location Type, the market is segmented into On-shore and Off-shore. By Vehicle Type, the market is segmented into Passenger Cars and Commercial Vehicles. By Propulsion Type, the market is segmented into IC Engines, Hybrid Vehicles, and Electric Vehicles. By Geography, the market is segmented into North America, Europe, Asia-Pacific, and the Rest of the World.
|By Application Type|
|By Location Type|
Key Market Trends
Auto Manufacturers' and OEMs' Continued Preference toward Outsourcing Services for Cost Savings and Product Integration
Engineering services outsourcing (ESO) is the practice of hiring non-physical engineering functions from an external source, such as design, prototyping, system integration, and testing. These services are needed from the start of the product design and development process and making use of a variety of IT-based tools and databases.
To keep up with consumer demand, automobile manufacturers have realized that they need to improve their engineering capabilities and innovation. Several governments are supporting automakers by offering incentives and tax cuts in exchange for producing automobiles that fully adhere to standards.
In order to follow the standards from conception to production, companies are outsourcing their projects for better output and also for time-saving. Outsourcing can help with a range of tasks, including creating parts, dealing with a company's supply chain, and developing engineering aftermarket assistance. Information technology can also aid in the speed and cost-effectiveness of product development.
Outsourcing assists businesses in integrating product development with related operations like engineering and warranty management. Outsourcing also gives businesses access to skilled workers who are familiar with local trends. Products that are adapted to the needs of local markets might give businesses a competitive advantage in terms of expanding their market share in the target areas.
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India is Expected to Dominate the Asia-Pacific Region
Large automotive OEMs are outsourcing production and related activities to countries like India, and China due to the availability of low-cost labor. As a result, ESO providers for the automobile industry are refocusing their efforts ESO providers for the automobile industry are shifting their bases to the APAC area.
Among the low-cost countries, India accounts for roughly 30% of all available engineering service outsourcing (ESO) and business process outsourcing (BPO) manpower. In comparison to European, Latin American, and North American countries, India offers a 15-26 percent cost advantage. For global OEMs catering to the needs of various segments around the world, India has provided a strongly competitive market. Kia and MG are two recent OEMs to enter the Indian market. Because of the strict emission regulations in place all over the world,
The automotive engineering services market is estimated to employ around 50,000 full-time equivalents (FTEs) in India's Global In-House Centers (GICs). Apart from GICs, there is a slew of additional Indian automotive service providers, as well as traditional BP/IT service firms, that offer automotive engineering services.
India is running programs like FAME, Automotive Mission Plan, and NATRIP, to boost the manufacturing, infrastructure developments, and adoption of electric vehicles. BYD has set up a manufacturing unit in collaboration with Olectra to produce electric buses in India and is looking forward to setting up a second unit. The Make in India program allows 100% FDI in the automobile sector without government approval, and Central and State governments provide various incentives and subsidies to boost manufacturing.
One offset to the growth of the current market in the country may be the lack of proper infrastructure, with respect to the automotive segment. While the IT infrastructure is adequate for the current requirements, the same is not true for other sectors (including automotive), requiring much investment in the future.
In this group of regional markets, China will continue to be one of the fastest expanding. The Asia-Pacific market is expected to register positive CAGR, led by countries like Australia, India, and South Korea.
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The automobile sector is witnessing collaborations, acquisitions, and partnerships throughout the globe. To keep up with the growing customer demand for connected vehicles, increased autonomy, and electrifications, OEMs are partnering with industry experts and leaders in IT and battery manufacturing. OEMs are producing white label vehicles for technology companies to install the latest features and technology that will make the vehicle suitable for the present need of customers. For instance,
- In September 2020, Bertrandt signed a cooperation agreement with Bozzio AG, one of the leading manufacturers of drive-by-wire systems. This cooperation will help to successfully advance the development of autonomous systems. Bertrandt and Bozzio will provide support for their customers from the initial concept to the final implementation, with the aim of decisively influencing vehicle development in the future.
- In April 2020, Capgemini announced its plan to acquire Paris-based engineering consulting firm Altran Technologies for USD 4.1 billion. The acquisition is expected to offer Capgemini with a full stack of capabilities across research and development (R&D) strategy, digital design, product engineering, manufacturing services, software development, and integration.
Some major players dominating the market include AVL, Bertrandt AG, EDAG Engineering GmbH, IAV GmbH, and Altran.
- In June 2021, IAV and the Massachusetts Institute of Technology (MIT) launched a joint research project for alternative propulsion systems, for which they are comparing and evaluating innovative drive types based on hydrogen, electrification, hybridization, and methane combustion in heavy-duty trucks.
- In February 2021, AVL entered into a strategic partnership with Batemo in the field of virtual battery development. The partnership between AVL and Batemo aims to consolidate battery modeling competence by which customers can be guided in design, function and system development, battery testing, and fleet operation.
Table of Contents
1.1 Study Assumptions
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET DYNAMICS
4.1 Market Drivers
4.2 Market Restraints
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.3.1 Threat of New Entrants
4.3.2 Bargaining Power of Buyers/Consumers
4.3.3 Bargaining Power of Suppliers
4.3.4 Threat of Substitute Products
4.3.5 Intensity of Competitive Rivalry
5. MARKET SEGMENTATION
5.1 By Application Type
5.1.3 System Integration
5.2 By Location Type
5.3 Vehicle Type
5.3.1 Passenger Vehicles
5.3.2 Commercial Vehicles
5.4 Propulsion Type
5.4.1 IC Engine
5.4.2 Electric Vehicles
5.4.3 Hybrid Vehicles
5.5.1 North America
220.127.116.11 United States
18.104.22.168 United Kingdom
22.214.171.124 Rest of Europe
126.96.36.199 Rest of Asia-Pacific
5.5.4 Rest of the World
188.8.131.52 Middle East & Africa
6. COMPETITIVE LANDSCAPE**
*List Not Exhaustive
6.1 Company Profiles
6.1.2 Bertrandt AG
6.1.3 EDAG Engineering GmbH
6.1.4 IAV GmbH
6.1.5 HORIBA Ltd
6.1.7 FEV Group
6.1.8 MBtech Group GmbH (A subsidiary of AKKA Technologies)
6.1.9 Alten GmbH
6.1.10 P3 Automotive GmbH
6.1.11 Altair Engineering Inc.
6.1.13 ESG Elektroniksystem- und Logistik-GmbH
6.1.14 RLE International Group
6.1.15 ASAP Holding GmbH
7. MARKET OPPORTUNITIES AND FUTURE TRENDS
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Frequently Asked Questions
What is the study period of this market?
The Automotive Engineering Services Outsourcing Market market is studied from 2018 - 2026.
What is the growth rate of Automotive Engineering Services Outsourcing Market?
The Automotive Engineering Services Outsourcing Market is growing at a CAGR of 27.5% over the next 5 years.
What is Automotive Engineering Services Outsourcing Market size in 2018?
The Automotive Engineering Services Outsourcing Market is valued at 76 Billion USD in 2018.
What is Automotive Engineering Services Outsourcing Market size in 2026?
The Automotive Engineering Services Outsourcing Market is valued at 253 Billion USD in 2026.
Which region has highest growth rate in Automotive Engineering Services Outsourcing Market?
Asia Pacific is growing at the highest CAGR over 2021- 2026.
Which region has largest share in Automotive Engineering Services Outsourcing Market?
Europe holds highest share in 2020.
Who are the key players in Automotive Engineering Services Outsourcing Market?
AVL, Bertrandt AG, EDAG Engineering GmbH, IAV GmbH, Altran are the major companies operating in Automotive Engineering Services Outsourcing Market.