Handheld Diagnostics Equipment Market in Europe - Latest Findings by Frost & Sullivan
Independent Market For Handheld Diagnostics Equipment Storms Ahead, Leaving Beleaguered OE Market In Its Wake The move from utilising purely mechanical tools to a hi-tech approach based on electronic equipment to diagnose and remedy malfunctions has transformed the automotive service and repair industry. This evolutionary, rather than revolutionary, transition has been prompted by the increasing complexity of the automobile. Although the use of electronics facilitates the identification of faults, the process of performing diagnostic processes on the vehicle goes beyond mere mechanical inspection. It requires technicians to analyse a significant amount of data gathered through an appropriate ‘interface’ that can communicate with the vehicle’s electronics. In an effort to enhance comfort and safety features and to achieve legislative compliance, in-vehicle electronics and embedded processors are becoming increasingly ubiquitous. This trend forces garages to make growing investments in sophisticated diagnostics devices. While in the past, diagnostics had to be performed through a non-standard connector in the vehicle, the implementation of the European On-Board Diagnostics (EOBD) in 2000 allowed off-board diagnostics equipment to connect to the vehicle through the standard J1962 connector. A new study by Frost & Sullivan, the international market consultancy, has established that the introduction of software-based products gives vehicle manufacturers an opportunity to make inroads into the independent diagnostics equipment market. Such a move will enable vehicle manufacturers to not only improve the quality of diagnostics and repair done by the independent garages, but also increases the aftersales support available to its customers. Frost & Sullivan pegs European sales of handheld diagnostics equipment in 2002 at EUR 257.3 million in terms of hardware revenues alone, equalling unit shipments of 56,900. Revenues generated by hardware sales are expected to almost triple by 2010. Meanwhile, software revenues from the OE and independent markets for handheld diagnostics equipment are forecast to grow significantly, as garages increasingly depend on up-to-date software to be able to repair the wide variety of vehicle models. Growth prospects in the OE handheld diagnostics equipment sector remain lacklustre as a direct result of the saturation of the OE handheld diagnostics equipment’s main customer group, the franchised service centres of vehicle manufacturers. Anil Valsan, Research Analyst at Frost & Sullivan, points to fluctuations in annual shipments for OE handheld diagnostics equipment, and attributes it entirely to the vehicle manufacturers' plans for expanding or contracting their franchised repair network and their intentions to change their service bay diagnostics strategies. The independent sector, the lynchpin behind revenue generation in the overall handheld diagnostics equipment market, continues to soar on the strength of dynamic unit sales, a marginal rise in equipment prices and growing demand from independent as well as franchised service centres. The independent equipment manufacturers, in stark contrast to the OE sector, provide a wide range of options to the repair market in terms of functionality, brand as well as model year coverage, consequently offering a more attractive price proposition. However, the only shortcoming of these products is the lack of consistent coverage of vehicle brands and models, in terms of diagnostics functionality. “We expect the product mix to shift from low functionality equipment to products that boast a wide range of diagnostics and physical test functions, such as multimeters, oscilloscopes and engine speed measurement modules,” Mr Valsan adds. Still, the products in the OE market are likely to retain their superiority in terms of functionality and model year coverage for specific brands. This prevailing excellence will enable the OE sector to retain the demand from the franchised dealers of vehicle manufacturers. The introduction of low-cost options marketed as “one-per-technician” as opposed to “one-per-dealer” products will cause a marginal decline in the cost of OE handheld diagnostics equipment. In order to capitalise on the growing demand for the software application upgrades in the OE handheld diagnostics equipment market, Frost & Sullivan urges equipment manufacturers to modify their business model suitably to benefit from an ongoing software revenue stream. In terms of market participants, Actia is the number one player in the European OE market for handheld diagnostics equipment, followed by Siemens, Teradyne, Vetronix and Sagem. The independent market has a larger group of participants, with Bosch taking the leadership position. Other companies present in the independent market include the Facom Group, Texa, Snap-on and SPX-Tecnotest. Frost & Sullivan believes that the shorter time-to-market and the advanced diagnostics capabilities of OE diagnostics equipment will be a strong incentive for the larger independent garages vying to enhance their competencies in the automobile repair market in Europe. While the independent market for handheld diagnostics equipment is likely to be shaped by regional trends in demand, the OE market will be driven by the changes in vehicle manufacturers' aftersales service and diagnostics strategies. Frost & Sullivan concludes that both the OE and the independent markets for handheld diagnostics equipment are highly competitive, with the latter poised for deepening consolidation, as manufacturers seek to increase their ability to reengineer diagnostics applications, and to reduce the number of competitors. Price: EUR 6,500 Publication Date: June 2003 Report Code: B161 Background Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets for trends, market measurements and strategies. This ongoing research is utilised to complement a series of research publications to support industry participants with customised consulting needs. Interviews and free executive summaries are available to the press. For more information contact: Kristina Menzefricke, Public Relations Department Tel. +44 (0) 20 7343 8376 Fax. +44 (0) 20 7343 8380 kristina.menzefricke@frost.com http://frost.com http://pressroom.frost.com
