Driven by factors like a strong consumer demand for enhanced safety features, the need for compliance with emission regulations and the original equipment manufacturers? (OEMs) commitment to introduce novel products, the automotive electronic control units (ECUs) market in India is witnessing steady growth.
Comfort and convenience, which top the agenda for customers, have triggered this growth, especially in the body control and steering systems segment. Also, emission norms and safety regulations will further drive the uptake of ECUs in India, says a recent research report by Frost & Sullivan. The report also says that the OEM market in India, which stood at 2.5 million units in 2007, is expected to see a rise of 23.8% annually.
?Government regulations, aimed at making the vehicle fleet safer and more environment-friendly, will increase the number of ECUs installed in mid-level to economy-level vehicles in India,? the research report said. The introduction of BS (Bharat Standards) IV in passenger and utility vehicles and BS III in commercial vehicles may also boost the demand for ECUs after 2010, it added.
The availability of better highways and intra-city roads has facilitated the quick access to destinations and customers are now more inclined to owning fast yet safe cars. Fierce competition characterises the market and manufacturers are focused on product differentiation to gain one-upmanship.
For passenger cars and utility vehicles, the market will grow threefold in the near future and new models will be launched, offering higher technology content, thereby driving the demand for ECUs. Increased safety awareness among consumers is also fueling the demand for anti-lock breaking systems (ABS) and airbags, while the demand for convenience features are driving the uptake of body-control systems.
The engine management system holds a major share in the ECU market, making huge inroads in the passenger vehicle segment. Automatic transmission and climate control are still in the fledgling stage and indications point to a market growth of 30% more by 2012.
?In light of the sheer number of new electronic systems incorporated in vehicles, continuous restructuring of the R&D of supplier companies is necessary,? adds the F&S report, adding that ?Electronic systems suppliers are required to keep pace with the technological advancements and roll out smaller, lighter and more intelligent systems to stay on top of the competition.?
However, trends indicate that automakers prefer to limit the number of key suppliers, instead opting for suppliers that offer unparalleled products and services. Sourcing electronic components from a supplier which can offer a wider range of expertise and products is far easier and less costly.
As electronics contracts are worth millions of dollars, suppliers cannot afford to underestimate these criteria. ECU volumes supplied to OEMs tend to be large. By employing cost-cutting strategies, suppliers are targeting contracts on smaller margins as OEMs continually demand lower prices. Along with the costs, quality, delivery and service are prerequisites for manufacturers to successfully garner contracts.