The global automotive electronics market is expected to expand at a compound annual growth rate (CAGR) of 7.9% during the forecast period, reaching a value of USD 392.49 billion by 2028, according to a new report by Grand View Research.
The growth is primarily driven by the increasing adoption of connectivity and autonomy in automobiles. Several factors including an increase in the demand for advanced safety features, a rise in the number of connected vehicles, and an upsurge in the deployment of electric vehicles are also driving the market growth.
Other key factors contributing to the growth include the escalating popularity of electric vehicles and autonomous driving technologies. In addition, increased investment in Advanced Driver Assistance Systems (ADAS) and autonomous vehicles are expected to drive innovation in automotive electronics hardware and software products, contributing to the growth of the automotive electronics market.
Key Industry Insights & Findings:
- Based on the component type, the sensors segment is expected to expand a CAGR of 3.8% during the forecast period. The segment is becoming popular in automobiles as they detect parameters such as heat, speed, and tire pressure.
- Based on the application, the Advanced Driver Assistance System (ADAS) segment is anticipated to exhibit a CAGR of 10.6% during the projection period. This is due to enhanced application possibilities and capabilities provided by these sensors.
- Based on the sale channel, the aftermarket segment is estimated to register a CAGR of 6.8% during the forecast period. The upsurge in sales is due to the increased production, remanufacturing, distribution, retailing, and installation of parts and accessories after the OEM has delivered the vehicle to the customer.
- Based on geography, North America is expected to experience significant growth due to the extensive production of motor vehicles and the presence of the key manufacturers of automotive electronics components in this region.
Automotive Electronics Market Growth & Trends
Though the market is booming, there are several challenges that the automotive electronics market faces, including the need for better interoperability and battery life. Besides, there is a lack of standardization and complexity of products across different platforms, which hinders their adoption across various industries, limiting the market flexibility. Furthermore, technological obsolescence issues also hamper the growth prospects of the market.
To address these challenges, new standards and specifications are being developed, which will help to improve the performance of electronic systems in cars. Overall, the automotive electronics market is expected to grow rapidly over the next few years due to increased demand from consumers and businesses alike. Also, the development of innovative products and solutions that address common market challenges, and expansion into new markets, can help companies gain a competitive advantage.
The COVID-19 pandemic has affected the demand for automotive electronics in 2020. Not only has it resulted in a decline in sales, but it has also caused critical shortages of components and parts, which, in turn, has caused a price hike. In addition, many manufacturers temporarily halted production due to safety concerns related to connectivity issues.
Furthermore, the overall production volumes in North America and Europe, among other regions, decreased, contributing to the decline in global vehicle production. For instance, global automobile production dropped by more than 15% in 2020, from 91.7 million units to 77.6 million units, according to the Organisation Internationale des Constructeurs d’Automobiles (OICA). Overall, the COVID-19 pandemic has significantly affected the automotive electronics market. It remains to be seen whether this will have a long-term negative or positive impact on businesses operating in this sector.