Segments - Automotive Engineering Services Outsourcing Market by Application (Powertrain and After-Treatment, Autonomous Driving/ADAS, Infotainment & Connectivity, and Others), Service (Prototyping, Testing, Designing, System Integration, and Others), Location (Off-shore and On-shore), and Region (Asia Pacific, North America, Latin America, Europe, and Middle East & Africa) - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast 2023 – 2031
The global automotive engineering services outsourcing market size was USD 99.20 Billion in 2022 and is likely to reach USD 208.81 Billion by 2031, expanding at a CAGR of 11.2% during 2023–2031. The market growth is attributed to the high adoption of electric vehicles and the integration of advanced technology solutions.
Increasing integration of innovative technology solutions is expected to boost the automotive engineering services outsourcing (ESO) market. The automotive ESO market has evolved from providing mechanical services to the integration of innovative solutions, such as the Internet of Things (IoT), artificial intelligence (AI), and others.
Rise in advanced services is providing benefits, such as commutation, safety, comfort, and ease of use to customers, as well as the rapid integration of information technology (IT) into automobiles. IT enabled the inclusion of several advanced features, such as Bluetooth and wireless local area network connectivity, app connection, navigation system, and other car information from sensors.
The market report finds that the COVID-19 pandemic hindered the automotive engineering services outsourcing market, due to the strict lockdown imposed by the government. During the pandemic, the production of vehicles was halted and the sales of vehicles declined, due to the shutdown.
The disruption of the export and import of automotive parts has stopped, due to the social distancing and strict lockdown, which hampered the market. Automotive manufacturers have resumed their work with safety measures, which is boosting the market.
Increasing demand for enhanced connectivity solutions by automotive manufacturers is expected to drive the automotive engineering services outsourcing market. It offers several services, such as smart infotainment, navigation, remote diagnostics, and passenger safety, which increases the demand for connectivity solutions, thereby fueling the market.
Growing trend of in-house design is expected to hinder the automotive engineering services outsourcing market. Several manufacturers are focusing on designing in-house facilities instead of outsourcing them to engineering service providers, owing to the complexity of designing the transmission, engine, and powertrain, which restrains the market. However, the high cost of engineering services and technological restrictions related to outsourcing services hampers the market.
Increasing inclination of original equipment manufacturers (OEMs) for digitalized solutions is expected to create lucrative opportunities for the market players. The automobile sector has taken a step forward by strengthening the use of 3D printing technology to create prototypes of entire car models as well as specific parts and components.
Several companies are adopting autonomous, connected, electric, and shared vehicles (ACES), which is a digitalized model that involves advanced mobility to increase consumer interaction and experience with vehicles in the market.
The market report includes an assessment of the market trends, market segments, and regional markets. Overview and dynamics have also been included in the report.
Attributes |
Details |
Report Title |
Automotive Engineering Services Outsourcing Market - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast |
Base Year |
2022 |
Historic Data |
2016–2021 |
Forecast Period |
2023–2031 |
Segmentation |
Application (Powertrain and After-Treatment, Autonomous Driving/ADAS, Infotainment & Connectivity, and Others), Service (Prototyping, Testing, Designing, System Integration, and Others), and Location (Off-shore and On-shore) |
Regional Scope |
Asia Pacific, North America, Latin America, Europe, and Middle East & Africa |
Report Coverage |
Company Share, Market Analysis and Size, Competitive Landscape, Growth Factors, Market Trends, and Revenue Forecast |
Key Players Covered in the Report |
Altair Engineering Inc; Alten Group; ARRK Corporation; Capgemini; ESG Elektroniksystem- und Logistik-GmbH; IAV; Kistler Group; Lightbend, Inc.; RLE INTERNATIONAL Group; and Volkswagen Group |
Based on application, the automotive engineering services outsourcing market is divided into powertrain and after-treatment, autonomous driving/ADAS, infotainment & connectivity, and others.
The powertrain and after-treatment segment is expected to expand at a significant pace during the projection period, due to the increasing focus on curbing carbon emissions and designing cost-effective engines.
The segment growth is further attributed to the electrification of powertrains as a replacement for internal combustion engines (ICE), boosted by gasoline and petroleum, which reduces the impact of carbon emissions on the environment. Significant investments by original equipment manufacturers (OEMs) in powertrain technologies are projected to boost the segment in the market.
In March 2023, Navistar collaborated with the TRATON Group to launch the International S13 Integrated Powertrain for the vocational market. The S13 Integrated Powertrain is an advanced and light vocational powertrain that is available in the market. It benefits vocational customers by achieving stellar performance, serviceability, simplicity, and superior operation.
The autonomous driving/ADAS segment is anticipated to hold a key share of the market in the coming years, owing to its ability to identify & sense its environment and offer a safe environment.
Advanced driver-assistance systems (ADAS) are technological features that are designed to increase safety while driving a vehicle. ADAS comprises numerous sensors, including GPS, lidar, inertial measurement units, radar, and others, that provide innovative sensory information and control systems to navigate plans.
In terms of service, the global market is segregated into prototyping, testing, designing, system integration, and others. The prototyping segment is projected to expand at a considerable CAGR during the forecast period, owing to the development of 3D printing technology to design a prototype of an assembly or a model of a whole car.
Manufacturers quickly identify the flaws in prototypes and take timely creative measures, supporting a cost-effective approach with the help of 3D printing technology. Companies are developing 3D CAD software to enhance communication through documentation, increase design productivity, create a database for manufacturing, and improve design quality. Thus, in turn, is likely to boost the market.
In July 2022, Volkswagen Group launched its first electrical Vertical Take-off and Landing (VTOL) passenger drone prototype, as part of its strategy to explore and break ground in fully electric and sustainable individual mobility concepts. The fully electric and automated electrical VTOL cloud carries four passengers and luggage over a distance of up to 200km.
The testing segment is anticipated to account for a major market share in the coming years, due to the increasing investment in the construction of test centers and rising requirements for automotive testing.
The segment growth is further attributed to the increasing investments by several manufacturing companies that are collaborating with R&D, designing, and engineering service providers to create advanced automobile features for consumers.
On the basis of location, the automotive engineering services outsourcing market is segmented into off-shore and on-shore. The on-shore segment is expected to register robust growth during the forecast period, owing to the increasing desire of OEMs to cooperate with locally available engineering solution providers (ESPs).
Growth of this segment is attributed to the increasing use of automation technology and self-serve solutions, which has stimulated automobile OEMs to pursue assistance from on-shore engineering service firms.
The off-shore segment is projected to hold a large market share in the coming years, due to the increasing importance of OEMs to outsource services to low-cost countries, such as China, India, Brazil, and others.
Engineering processes demand the latest technology and innovative skills to deliver effective results. Companies often send these processes overseas, as companies get access to improved technology, skills, and productivity at low prices when they offshore engineering services.
In terms of region, the global automotive engineering services outsourcing market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Asia Pacific is expected to dominate the market during the projection period, owing to the increasing adoption of electric passenger cars, particularly in China.
China accounts for the largest automotive market, due to the growing middle class and high demand for high-quality vehicles, which create immense opportunities for engineering service providers to partner with domestic automotive manufacturers to develop technologies and products that meet the needs of consumers. Several companies are collaborating to launch ESOs, which boosts the market in the region.
In February 2021, Apollo Future Mobility Group completed its acquisition of Ideenion Automobil AG a Germany-based automotive ESO provider. This acquisition strengthens the Group’s business strategy in expanding its energy vehicle solutions and services and becoming a key full solutions provider.
The market in North America is anticipated to expand at a rapid pace in the coming years, due to the increasing need for automotive ESOs to enhance their core competencies while outsourcing other aspects of businesses to service providers.
OEMs are seeking flexibility to meet the needs of customers in several regional markets, while combating globalization, operational complexity, demand fragmentation, and technological challenges. OEMs to third-party providers allows them to focus on their strengths while preserving high-quality production levels in areas outside their capabilities.
The global automotive engineering services outsourcing market has been segmented on the basis of
Key players competing in the global automotive engineering services outsourcing market are Altair Engineering Inc; Alten Group; ARRK Corporation; Capgemini; ESG Elektroniksystem- und Logistik-GmbH; IAV; Kistler Group; Lightbend, Inc.; RLE INTERNATIONAL Group; and Volkswagen Group
These key players adopt various strategies, including mergers, acquisitions, collaboration, partnerships, product launches, and production expansion, to expand their consumer base globally.
In June 2022, Altair Engineering Inc, acquired Concept Engineering to expand electronic system design technology. Concept Engineering provides automatic schematic generation tools as well as electronic circuit and wire harness visualization platforms that provide on-the-fly visual rendering and electronic design debug solutions.