The Automotive Engineering service market is projected to grow from 153.2 billion in 2022 to 243.9 billion by 2028, registering a CAGR of 8.1%.

Prototyping segment to be the largest market by value during forecast period

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In-house to be the fastest growing segment during the forecast period

The In-house segment is estimated to be larger than the outsource segment during the forecast period. To control the overall vehicle engineering process, OEMs prefer to keep the research and design in-house. Many OEMs have established their in-house teams for automotive software, such as BMW’s Car-IT and Volkswagen’s Car Software, and few other companies are developing long-term partnerships or joint ventures with application software specialists like Audi-Elektrobit. Performing engineering services in-house has many advantages over outsourcing those services such as streamlined communication, improved quality control, faster time to market, ability to address changes in technology, and improved customer satisfaction. This leads to OEMs preferring in-house R&D for major applications, which are developed by them, or with the participation of others. For instance, Alten Group, a French engineering service provider, supported the in-house development of the powertrain of a British car manufacturer. The car manufacturer availed Alten Group’s services to develop a compact, lightweight, and low-emission ICE powertrain. Alten Group assisted the automaker by sending 150 engineers to the UK for the in-house project. Major Asia Pacific companies focus on designing electric vehicles with their own customizations, which enhance the demand for in-house investments. Tata Motors has an in-house software company that designs and develops innovative software for future automobiles. Automotive designing in Europe and North America is also likely to grow during the forecast period. The European company Volkswagen provides in-house car software. The company stated that from January 1, 2020, the Car software service will operate as part of an independent business unit

“Asia Pacific to be the fastest growing market for automotive engineering services during the forecast period”

Asia Pacific is estimated to be the fastest-growing market. The growth of the Asia Pacific automotive engineering services market can be attributed to favorable government regulations and the high adoption of electric passenger cars and commercial vehicles. The region has the presence of top outsourcers, such as Great Wall Motor, Tata Motors, Daimler, Volvo, and Groupe PSA. Japan is estimated to be the largest market during the forecast period. Japan plays a vital role in the development of advanced electronic technology in Asia Pacific. With advancements in technologies such as smart components, ADAS and safety solutions, autonomous driving and connectivity solutions, EV powertrains and batteries, and fuel cell technology, the automotive engineering services market in Japan is expected to grow. India is expected to be the fastest-growing market during the forecast period due to the presence of automotive service providers such as Tech Mahindra, L&T Technology Services, and HCL Technologies. These companies offer services such as body engineering, hybrid & electric mobility, infotainment & connectivity, and powertrain engineering to OEMs globally. With the increase in electric passenger and commercial vehicle sales in Asia Pacific, the demand for automotive engineering services, such as simulation, battery development & management, charger testing, and motor controls, is expected to grow.

Key Market Players:

The automotive engineering services market is dominated by established players such as Capgemini (France), IAV Automotive Engineering (Germany), Tech Mahindra (India), AKKA Technologies (Belgium), and HCL Technologies (India), among others.

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