Reducing Costs of New Technologies - The Path to Success in North American Automotive Lighting Markets

PALO ALTO, Calif.--Oct. 1, 20048, 2004--Success in the North American automotive lighting technologies market depends on how efficiently participants can introduce new technologies while helping automakers achieve their cost reduction targets.

Manufacturers of advanced lighting technologies strive to contain costs while allowing automakers to not only differentiate their vehicles stylistically but also from a safety point of view.

A new market study from Frost & Sullivan (http://www.transportation.frost.com), Analysis of the North American Automotive Lighting Technologies Markets, reveals that revenue in this industry totaled $1.66 billion in 2004 and projects to reach $2.11 billion in 2010.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the Analysis of the North American Automotive Lighting Technologies Markets -- then send an email to Melina Gonzalez -- Corporate Communications at melina.gonzalez@frost.com with the following information: your full name, company name, title, telephone number, fax number and email. Upon receipt of the above information, an overview will be sent to you via e-mail.

Significant advances in light source technology such as high-intensity discharge (HID) headlights and light-emitting diode (LED) rear combination lamps and third brake lights are finding market demand. Development of adaptive front lighting (AFL) systems, LED-based front lighting, and night vision (NV) systems offer improved road safety and driver comfort.

"Safety is now a key selling point, and advanced lighting systems enhance safety in a number of ways," states Frost & Sullivan Senior Industry Analyst Joerg Dittmer. "HID front lighting casts more light, AFL directs light where it is needed, NV systems use infrared light to project an image of the road ahead on the windshield, and LED brake lights illuminate more quickly."

Though the constant introduction of new vehicle models generates a demand for lighting equipment, parts suppliers feel a squeeze due to lower prices, industry consolidation, and cost-cutting programs. Automakers are also pushing more design, development, engineering, testing, and validation work on suppliers.

The continuing cost-cutting pressure has a negative effect on the research and development (R&D) efforts of lighting manufacturers. Reduced margins and fewer projects slow down the process of developing advanced technologies in lighting systems.

Suppliers seek to grow through mergers, acquisitions, and joint ventures that are likely to allow them to spread fixed costs over higher production volumes. They are also working to maximize efficiency in all aspects of their operations -- trimming costs by minimizing waste, scrap, and rework; minimizing inventories; and by automating.

Although the process of consolidation within the industry is ongoing, there is still significant overcapacity which -- combined with intense competition -- has led to eroding profit margins across the industry. Marketing costs and the burden of legacy infrastructure also are at an all-time high.

In the mature automotive lighting systems industry, cyclical demand for vehicles imposes costs on suppliers as they swing between working below capacity in times of downturn and exceeding capacity in boom times. This, together with cost-cutting pressures, makes most segments of the automotive supplier business a challenge.

Suppliers of advanced lighting systems are working to cut the prices of their products to increase the penetration rate. They are acutely aware that high prices restrain wider adoption and that their systems must be more cost-competitive.

"Typically, prices for new-technology products drop substantially as manufacturers automate production and redesign products to reduce costs," notes Dittmer.

Vehicle manufacturers' ability to leverage platforms and components across wider ranges of products is pushing lighting suppliers to develop standardized components that can be used in various vehicles, while allowing vehicle designers to maintain the individuality of each model.

Analysis of the North American Automotive Lighting Technologies Markets, part of the North American Advanced Automotive Technologies subscription, is a comprehensive analysis of key market dynamics such as drivers, restraints, and challenges. Revenue forecasts and pricing trends enable market participants to develop strategic business growth plans. Executive summaries and interviews are available to the press.

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Analysis of the North American Automotive Lighting Technologies Markets

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Keywords: automotive lighting, North America, market, research, information, market, trends, technology, service, forecast, high-intensity discharge headlights, HID, light-emitting diode, LED, rear combination lamps, third brake lights, adaptive front lighting systems, AFL, LED-based front lighting, night vision systems, NV, advanced lighting technology, legacy infrastructure, automotive, automakers, vehicle