Automotive Electronics – The Billion Dollar Industry Of The Future?

Automotive Electronics – The Billion Dollar Industry Of The Future?

Ashish Gulati is Country Head India, Telit

Automotive industry plays a major role for any growing economy and also plays an important role in a country's rapid economic and industrial development. The Indian automotive industry contributes significantly to the overall GDP of the nation and also provides significant business and employment opportunities.

Today's car is already packed with electronics and has the highest density of electronic components as compared to other consumer machines. A plethora of technologies powers the car today and these technologies primarily fall into three domains – safety & security, infotainment & telematics, and powertrain (engine & transmission, including other components that are an integral part).

Infotainment and telematics are addressed by technologies that enable smart traffic management, positioning & location-based services, car-to-car & car-to-infrastructure communication and in the future, perhaps autonomous driving. The Indian automotive industry is witnessing a phase of rapid transformation and growth, mainly driven by stable economic growth and infrastructure development. Along with the automobile manufacturers, the auto components industry is also gearing up to compliment such transformation and growth.

GROWING IMPORTANCE

Automotive electronics has gained importance on account of the growing consumer demand for performance, safety, comfort and entertainment. The future car is also expected to be equipped with even more advanced features that would help prevent accidents, entertain occupants and at the same time, would be eco-friendly. Automotive companies are also looking to stretch their market by introducing such novel features.

Market drivers like economy, ecology and safety are critical to the automotive sector. GDP, consumer confidence, employment levels, availability of credit and fuel prices are some of the economic factors that impact the auto industry. Typically, economic factors that impact disposable income also drive the automotive sector. In addition to economic drivers, the automotive sector is impacted by ecological and safety factors and concerns that are quite often mandated by governments, including fuel economy and CO2 emission levels.

We've been witness to the growth in innovation in automotive electronics. Advances in electronics have enabled automotive manufacturers to increase the value in their products by offering more features and improved reliability. New technologies evolving in this sector include semiconductor electronics capable of delivering more efficient power management and conversion systems. These products are important drivers of improved fuel economy and emissions performance.

CHALLENGE & OPPORTUNITIES

Carmakers today are competing to bring in advanced features, connectivity and entertainment, advanced safety and improved fuel efficiency to their products to attract potential buyers. To address this ever increasing list of consumer needs, more and more technological advancements will happen and automotive electronics will play a pivotal role to satisfy all the user requirements. This paves way for complex electronic systems and providing cost competitive electronic solutions is a challenge and an opportunity for Indian automotive companies.

Industry analysts predict that by 2025, 100 % of all new cars would be Internet-enabled. IT would be an industry revolution that would redefine the driving experience and create opportunities for explosive business growth around the globe with Telematics playing a key role. According to industry experts, global auto companies are closely watching the Indian market to leverage the region as a global sourcing hub.

As with consumer electronics, technology has transformed the automotive segment with the rising introduction of sophisticated features such as seamless connectivity with mobile devices, advanced driver safety and in-vehicle infotainment. These features are not just restricted to the luxury vehicles, but have trickled down to lower segments too, proving to be a new factor of product differentiation.

CONCLUSION

The Indian auto component industry is expected to register a turnover of $ 66 bn by FY 15-16, and is expected to grow to $ 115 bn by FY 20-21 depending on favourable conditions, as per the estimates of the Automotive Component Manufacturers Association of India (ACMA). In addition, industry exports are projected to reach $ 12 bn this fiscal, and add up to $ 30 bn by FY 20-21. Also, the annual market for passenger cars, which is currently at two mn is set to touch five mn by 2020.

While market potential and opportunities remain vast, the industry will be posed with important challenges and bottlenecks that need to be mitigated in the most cost-effective and efficient manner, to attain common objectives.