Automotive Engineering Sources Outsourcing Market 2024 – Market Size & Segments Analysis, Industry Trends, Manufacturers Analysis, Opportunities and Forecast 2030

The global market value of automotive engineering sources outsourcing market was valued at USD 85.8 billion in 2022, and CAGR of 11.2% is expected during the forecast period. Rapid demand for enhanced and advanced connectivity solutions is driving growth in the market. Demand for enhancing connectivity solutions is rising due to its ability to offer various services such as navigation, smart entertainment, passenger safety, and remote diagnostics.

Increasing complexity of automotive technologies, including autonomous driving and electric vehicles, drives the demand for specialized engineering services. Outsourcing allows automotive companies to reduce the cost associated with in-house research and development, testing, and development. Increasing industrialization and rising urbanization are driving growth in the market.

Growth Drivers

Increasing demand to cut operational costs by leveraging lower-cost labor with the help of automotive companies is driving the demand in this sector significantly. Outsourcing allows automotive firms to tap into specialized skills and advanced technologies not available in-house. Outsourcing provides the flexibility to scale operations up or down based on demand without the need for substantial internal adjustments. Outsourcing partners often bring in cutting-edge technology and innovative solutions that do enhance the product development process.

With the global expansion of automotive companies, outsourcing helps them manage diverse markets and meet local regulations more efficiently. Outsourcing certain functions does accelerate product development cycles and reduce time-to-market for new vehicles and technologies. Distributing work across multiple suppliers helps mitigate risks related to production and supply chain disruptions. Increasing growth in outsourcing in most parts of the world is driving growth in the market.

 Segmentation

Applications

·         Powertain and After treatment

·         Body and Chassis

·         Infotainment and Connectivity

·         Autonomous Driving

·         Others

Location

·         On-Shore

·         Off-Shore

Service

·         Designing

·         Prototyping

·         System Integration

·         Testing

·         Others

Regional Outlook

·         Asia Pacific

·         North America

·         Latin America

·         Europe

·         Middle East and Africa

Automotive Engineering Sources Outsourcing Market Service Segmentation

On the basis of the service, the automotive engineering source outsourcing market is segmented into designing, prototyping, system integration, testing, and others. Designing is generally the leading segment, which encompasses a wide range of activities, including concept development, design optimization, and advanced engineering design, which are crucial for the innovation and competitive differentiation of automotive products.

This segment often attracts significant outsourcing due to its complexity and the need for specialized experts. Prototyping involves creating physical or virtual prototypes of automotive components and systems to evaluate design and functionality before full-scale production. Outsourcing prototyping helps companies access advanced technologies.

Testing includes various testing services. High production efficiency and better technology are the needs of the automotive industry, which is achieved by using rapid prototyping. Increasing demand for innovation in the automation sector is driving growth in the market significantly. 3D printing technology is one of the most popular methods of creating a prototype. Testing is crucial for ensuring vehicle safety, performance, and compliance with standards.

Including crash simulations, durability tests, and emissions testing, examples include TUV, SUD, UL, and SGS. Specialized consulting firms provide expertise and resources for automotive testing, such as FEV, AVL, and Ricardo. Facilities focused on specific types of testing, like aerodynamic testing or electric systems testing, are outsourced. Companies like BOSCH offer such services. Universities and research institutes with automotive engineering programs offer testing services or collaborative opportunities. Some suppliers offer testing services for their own components, ensuring compatibility and performance along with efficiency.

Regional Outlook

On the basis of the regions, the automotive engineering sources outsourcing market is segmented into 5 parts: Asia Pacific, North America, Latin America, Europe, and the Middle East and Africa. North America is the leading segment in the market and is expected to dominate the market during the forecast period. North America, particularly the United States, has a well-established technological and engineering infrastructure that supports automotive advanced engineering solutions.

The increasing number of highly skilled engineers in the regions is driving growth in the market significantly. Major automotive companies and suppliers have their head offices in North America, creating a significant demand for outsourcing engineering services to meet their needs. Outsourcing to countries with lower labor costs while leveraging North America’s advanced technologies and expertise leads to cost savings and increased efficiency for companies. North American companies often focus on research and development, which drives the need for outsourcing specialized engineering tasks to leverage global expertise and resources. Region sets high standards for automotive engineering, and outsourcing allows companies to maintain these standards while tapping into global talent. Asia Pacific is the second-leading region in the market.

Asia Pacific is another region experiencing significant growth in the automotive engineering outsourcing market. Technological advancements and rising industrialization in the region are driving growth in the market. Countries in Asia Pacific regions, such as India and China, offer competitive labor costs compared to western countries, making them attractive for outsourcing. The region has a large pool of skilled engineers due to the large population in countries such as India and China. Many Asia-Pacific countries have robust IT and engineering infrastructure, supporting efficient outsourcing operations. The automotive industry in Asia-Pacific is expanding rapidly, with many global automakers setting up manufacturing and R&D facilities in the region, which drives demand for outsource engineering services. Several governments in the region offer incentives and support for the automotive structure and outsourcing, further boosting the market growth.

Improved communication and technology infrastructure is driving growth in the market in European countries like Germany, France, Italy, Spain, and England. Europe is well-known for its strong focus on innovation and technological advancements in automotive engineering, leading to high demand for specialized engineering services. Established automotive industry and focus on sustainability, along with high-quality engineering services, are the factors driving growth in the market significantly. While not as cost-effective as other regions, outsourcing helps European companies manage costs while maintaining high standards in engineering services.

Key Players

·         AKKA

·         Alten Group

·         ASAP Holdings GmbH

·         EDAG Group

·         FEV Group GmbH

·         ITK Engineering GmbH Kistler group

·         FEV Group GmbH

·         Horiba, Ltd

·         ESG Elektroniksystem – und-logistic-GmbH

·         P3 Group GmbH

·         RLE International Group

·         ARRK Product Development Group Ltd

·         Altair Engineering Group

·         Other Players