The Global Automotive Engineering Services Market Size was valued at USD 168.2 Billion in 2023 and is anticipated to reach USD 326.9 Billion by 2032 with a CAGR of 7.8% from 2024 to 2032.

Automotive engineering services include a wide number of activities that are related to the design, development, testing and production support of automotive products and parts. These services include the use of engineering and technological concepts, application of new knowledge and skills and professional experience to develop functional, safe and reliable automotive systems. The range of these services covers design of vehicles, powertrains, electrification, ADAS and safety systems, autonomous driving systems, simulation, prototyping and compliance. Automotive engineering services are of paramount importance to the delivery of new and enhanced automobiles to the market at lower costs and standard compliance.

Automotive engineering service has evolved and is evolving due to the progress in electrification, connectivity and need for e-mobility. These services now span across the more conventional automobile design and construction and cover new areas like; self-driving, incorporation of electrical vehicles, and energy management. Through the use of such technologies as computer-aided design (CAD), simulation software, and real-time testing frameworks, engineers are creating innovative vehicle architectures and intelligent systems. Integration between OEMs and service providers has become inevitable in order to reduce time to market, improve quality and keep costs low. This integration of skill and innovation is not only meets consumer requirements for power and protection but also aligns with environmental and legal requirement.

Automotive Engineering Services Market Dynamics

Increasing demand for connected services in automobiles to boost the market growth. The incorporation of connected services into automobiles has greatly transformed the vehicle user interface. These services allow the users to control and manage their cars through a smartphone application, which are developed by car makers. The apps that are available in the mobile devices allow users to locate the car, monitor the mileage, open or unlock doors and even warm up the battery in electric cars. The functionality of connected services is also different for each manufacturer, and this is mainly because all the connected services are designed according to the vision of each brand. For example, Audi has a connected service platform Audi Connect which is available through the myAudi mobile application.

The ability to implement and develop connected services that align with OEM is likely to boost the growth of the automotive engineering services market throughout the forecast period. Firms like WirelessCar are currently acting as the catalysts to drive the future evolvement of such features to enrich the driving experience. As the market of smart and efficient automotive solutions is expanding, connected services are becoming one of the leaders of the future automotive market.

The transition to electric automobiles is now one of the key strategies being undertaken by the car manufacturers to fight emissions and create eco-friendly transport. This shift has created higher demand for engineering services in the development of strong EV platforms, efficient battery systems and setting up of charging networks. These services help manufacturers to create vehicles that conform to environmental standards and which reflect the trend towards electric vehicles. Given the expanding popularity of EVs, engineering services remain a key to solving the emerging issues such as range extension, thermal management, and energy efficiency.

The high cost of implementing advanced technologies poses a significant challenge to the growth of the automotive engineering services market. For OEMs and tier 1 suppliers need engineering talent and resources creating solutions for autonomous driving, connectivity, electric mobility, and shared transportation requires significant engineering expertise and capabilities. However, the creation of the required infrastructure and the acquisition of expertise in such fields as autonomous systems, vehicle connectivity, ADAS, EV batteries, and fuel cells require significant amounts of capital.

Implementing these advanced technologies also requires reinventing the current human resource, which again increases operational costs. The capital costs involved with upgrading infrastructure remain a significant challenge, especially to small to medium-sized component makers who may not be able to expend a lot on research and development of new, innovative automotive solutions. For this reason, these challenges make it very difficult for the small players to perform well in the ever growing market.

Furthermore, the introduction of advanced driver assistance systems has become one of the most important topics in the creation of new vehicles. Systems such as ACC, collision avoidance, and lane-keeping systems are complex in design and implementation, and any design, integration, and testing need to be of high precision. These technologies not only make drivers safer but also contribute to progressively increasing car autonomy by minimizing risk factors introduced by human behavior. Engineering services play a critical role in integrating the best-in-class ADAS features by deploying sensors, machine learning, and real-time data processing to transform driving experience and match up with consumers’ expectations.

Global Automotive Engineering Services Market Segment Analysis

Automotive Engineering Services Market By Location

·       In-House

·       Outsource

As per the automotive engineering services market forecast, the in-house segment is expected to grow at a high CAGR during the period between 2024 and 2032. This expansion is driven by the increasing focus on keeping key-strengths secret and having more control over the innovation processes. Companies concurrently invest more resources to build in-house competencies to perform core engineering tasks such as powertrain development, software incorporation and safety evaluation. By having an in-house solution, a company is better aligned with strategic initiatives, faster in the implementation of new technologies, and quicker in the adaptation to changes in regulatory requirements and thus, achieve a competitive advantage in the constantly changing automotive space.

Automotive Engineering Services Market By Service

·       Designing

·       Prototyping

·       System Integration

·       Testing

·       Others

As per the automotive engineering services industry analysis, the prototyping emerged as the largest market for rapid prototyping technologies in 2023 due to the high costs incurred for creating several prototypes before arriving at the final design for production. Using prototypes in automotive engineering is important to get the best designs that will perform best, are safe and efficient and to avoid many risks that are likely to occur when manufacturing the product in a large scale.

Likewise, the designing segment remains the most influential segment in the automotive engineering services market. Manufacturers are also paying attention to attaining the highest power-to-weight rations as they center the development on vehicles with more extensive, stretched cabins for improved comfort and utility. This design strategy also addresses consumers’ needs and the increasing trend towards more elegant and elaborate vehicle structures..

Automotive Engineering Services Market By Application

·       ADAS and Safety

·       Electrical, Electronics, and Body Controls

·       Chassis

·       Connectivity Services

·       Interior, Exterior, and Body Engineering

·       Powertrain and Exhaust

·       Simulation

·       Battery Development and Management

·       Charger Testing

·       Motor

·       Others

Among all the applications, the ADAS & safety segment saw the highest market share in 2023 and remains the market leader in the global front. The features like autonomous driving, collision avoidance system and adaptive cruise control are few of the major growth factors in this segment which is forcing the need for engineering services in the areas of vehicle safety and better driver assistance systems.

The application of AI, sophisticated sensors and real-time data analysis in ADAS & safety systems greatly enhances vehicle safety, minimizes and prevents accidents and improves driving experiences. The segment’s growth rate is steady due to the rising customer awareness of advanced and safe automobiles, enhanced regulatory standards, and high research and development spending in autonomous and connected automobiles. All these factors make ADAS & safety an industry fundamental for innovation in automotive engineering services market.

Automotive Engineering Services Market By Vehicle Type

·       Passenger Cars

·       Commercial Vehicles

By vehicle type, passenger cars are expected to contribute the highest share of over 52% market share in convenience and comfort are expected to drive the sales of electric cars up to 2024. Passenger cars provide privacy and are convenient means of transport designed for a family in particular. Their designs aim at offering large interior space, luxurious extras and improved ergonomics for comfortable and hassle free riding. Also, factors such as rising urban population and the presence of two working incomes in most households have made them rely on personalized cars for business and recreation. This explains why there is higher production and sales of passengers cars than commercial vehicles as shown above.

Automotive Engineering Services Market Regional Analysis

North America dominates the automotive engineering services market due to high health care awareness level, well-developed health care industry and high health care expenditure, and early adoption of advanced technologies. The region has good reimbursement policies and regulatory procedures for equipment and has very good policies that enable many automotive engineering services to be in the region. In addition, increasing incidence of chronic diseases and increasing demand for sophisticated diagnostic imaging procedures are other factors that are contributing to the market growth and maintaining North America on the leading position.

Europe ranks immediately after, due to a rise in the diagnostic imaging demand in the region and constant enhancement of the health care facilities. The Asia-Pacific region is characterized by a fast-growing market due to growing healthcare accessibility, rising prevalence of chronic diseases, and growing investments in medical technologies. In MEA region the market is still in its budding stage due to the enhancement in the healthcare facilities and awareness about the high end diagnostic services. Latin America on the other hand has a high growth rate due to rising healthcare expenditure and increasing patient pool of the region demanding diagnostic imaging solutions.

Automotive Engineering Services Market Leading Companies

The automotive engineering services market players profiled in the report is AKKA Technologies, Alten Group, AVL, Bertrandt AG, Capgemini, Continental Engineering Services, EDAG, ESI Group, HARMAN International, HCL Technologies, IAV Automotive Engineering, L&T Technology Services, Ricardo, Segula Technologies, and Tech Mahindra.

Automotive Engineering Services Market Regions

North America

·       U.S.

·       Canada

Europe

·       U.K.

·       Germany

·       France

·       Spain

·       Rest of Europe

Latin America

·       Brazil

·       Mexico

·       Rest of Latin America

Asia-Pacific

·       China

·       Japan

·       India

·       Australia

·       South Korea

·       Rest of Asia-Pacific

Middle East & Africa

·       GCC

·       South Africa

·       Rest of Middle East & Africa