Frost & Sullivan's Analysis of the Automotive Sensors Market in Europe
Emission Clampdown And Fast-Rising Demand For Safety Features Give Fresh Momentum To Automotive Sensors Industry The cyclical nature of the automotive industry is reflected in the current market conditions of numerous sensor applications, now on the threshold of maturity. As the automotive sensors business is nearing saturation, those segments displaying rapid growth in implementation rates and consequent price declines – such as sensors used for tire pressure monitoring and driver assistance systems - will kick-start a revival in fortunes. A new study by Frost & Sullivan, the international market consultancy, observes a growing safety consciousness amongst the car-buying public. Motorists’ evolving requirements for vehicle diagnostics and monitoring applications continue to drive advancements in sensor technology. The ever-increasing complexity of vehicles is matched by the strong uptake of sensor technology in the automobiles. In 2002, sales of automotive sensors amassed $1.6 billion, set to reach $2.6 billion by 2009. This equates to unit shipment growth from 342 million to 527 million during the same timeframe. The projected decline in average prices for most sensors is responsible for the lack of correlation between unit volume and revenue growth. The deployment of current and anticipated future innovations offering the driver a number of high performance and safety features, such as more advanced electronic braking systems, electronic stability programme (ESP) and active suspension, will further stimulate growth. In anti-lock brake systems (ABS) and airbags, car manufacturers have found another positive discriminator that will help to give them an edge in this highly competitive market. Companies vying to steal their competitors’ thunder must expand their product range where necessary to embrace these new technologies, Frost & Sullivan points out. Forming strategic alliances and joint ventures as well as acquiring such manufacturing techniques directly through mergers and acquisitions are among the options of achieving this goal. Alternatively, companies specialising in niche markets should re-evaluate their strategy to fortify their position in an increasingly competitive market. To survive in low margin markets, companies must maximise efficiency in all aspects of their operations, especially manufacturing. Under the Kyoto Protocol, the EU is required to cut its combined emissions of carbon dioxide. The European Commission also reached an agreement with ACEA, whereby the European car manufacturers' representative body commits itself to cut the average carbon dioxide emissions level in passenger cars and vans by 25 per cent by the year 2008. Peter Bowlus, Research Analyst at Frost & Sullivan, reports: “Environmental regulations coming into effect in 2005 are expected to create strong gains for the gas sensors market as the use of oxygen lambda and nitrogen oxide sensors becomes increasingly widespread.” More sophisticated fuel, powertrain and engine management systems, for example fuel injection and the shift to x-by-wire technologies, will also give the automotive sensor market new impetus. In 2002, sensor sales to powertrain applications amounted to 39.6 per cent of total revenues generated in the automotive market and are expected to decline to 29.4 per cent by the end of the forecast period. The powertrain sector is coming off the boil as other sectors, such exhaust systems and driver assistance, are recording burgeoning growth. Sensors for driver assistance systems are expected to show the most significant growth in revenue share over the course of the forecast period. New technologies in sensor manufacturing are constantly emerging, allowing previously cost-prohibitive devices such as non-contact types to become a realistic option for car manufacturers. Demand for silicon micromachining is expected to show unprecedented growth over the course of the forecast period. “There has been interest in the use of more intelligent non-contact sensors in recent years, and in many cases, passive technologies are being replaced by active solutions,” Mr Bowlus says. The combination of sensors for different applications will, in some cases, have an adverse effect on the development of the automotive sensor markets. Temperature manifold air pressure (TMAP) sensors, for example, are being implemented on a large scale, jeopardising sales of less multi-functional product types. The competitive environment is dominated by large suppliers of sensors and sensor systems, with high volume, low cost manufacturing capabilities and continuous investment in research and development (R&D). Hence, the overall automotive sensor industry is typified by large orders, tight profit margins and falling prices. Followed by Siemens VDO and Delphi Automotive, Robert Bosch was the undisputed market leader in 2002, accounting for 20 per cent of total European automotive sensor sales. The company is particularly strong in the areas of oxygen lambda sensors for exhaust systems, manifold absolute pressure (MAP) and mass air flow (MAF) sensors, electronic accelerometers and driver assistance sensors. Report Code: B158 Publication Date: May 2003 Price: EUR 6,500 Background Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets for trends, market measurements and strategies. 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