Automotive Electronics Sensor Aftermarket Market Analysis

Automotive Electronics Sensor Aftermarket (Global, 2023)

Introduction

The development of the OE market for automotive sensors is a major factor in the evolution of the automotive industry, which is increasingly integrating advanced technology into vehicles. The reliance on complex sensors has led to the emergence of a growing aftermarket sector, which replaces or improves these critical components. In this way, the complexity of vehicles is reflected in the wide variety of sensors used in the OE market, such as sensors for engine management, safety and entertainment. The development of electric and driverless vehicles will also have an impact on the aftermarket for sensors. This will bring with it both challenges and opportunities for manufacturers, suppliers and service suppliers. The ability to understand the dynamics of this market is essential for anyone who wants to be able to compete in this sector and benefit from the trends reshaping the industry.

PESTLE Analysis

Political

In 2023 the car industry is largely influenced by government regulations aimed at reducing emissions and increasing safety. In the European Union, for example, there is a target to reduce car emissions by 55 per cent by 2030 compared to 2021. This directly influences the demand for advanced sensors that monitor the emissions and performance of cars. In the US, meanwhile, the government has allocated about $7.5 billion to a fund for the development of electric and hybrid cars, which includes sensors.

Economic

The aftermarket for sensors is influenced by fluctuations in the amount consumers spend and in the sales of automobiles. In 2023, the average price of new vehicles in the U.S. was $47,500, an increase of 5% over the previous year. This could result in increased demand for aftermarket sensors as consumers seek to maintain or enhance their vehicles. Also, the global market for sensors employed over 300,000 people in manufacturing and research and development, a robust labor market that supported the aftermarket.

Social

A growing preference for vehicles with greater technological content, with greater emphasis on safety and communication, is changing the tastes of consumers. Surveys show that in 2023 a majority of consumers will give priority in buying to a system of assistance to the driver based on sophisticated sensors. Moreover, they will be willing to invest more in the acquisition of sensors which will improve the driving experience.

Technological

The field of the sensors in the automobile is undergoing rapid development, especially in the field of artificial intelligence and machine learning. By 2023, it is estimated that more than 40 percent of new cars will have some kind of artificial intelligence-based sensors that will enhance the functionality of such functions as adaptive cruise control and collision avoidance. The aftermarket is responding quickly to this technological development, with companies investing more than $ 1 billion in R & D to develop next-generation sensors that meet the evolving requirements of consumers and regulators.

Legal

The car industry is subject to stringent regulations with regard to safety and exhaust emissions, which directly affect the aftermarket for sensors. In 2023, the National Highway Traffic Safety Administration (NHTSA) announced that, in order to meet new safety regulations, vehicle manufacturers would have to install new, advanced sensors in 85% of new cars by 2025. In the aftermarket, the opportunity is to offer a solution that complies with these requirements.

Environmental

The growing importance of the environment for the aftermarket for sensors is reflected in the increased importance of issues such as the environment, energy and waste disposal. By 2023 it is estimated that about 30 per cent of the total waste from cars will be made up of electrical components, including sensors. The industry is responding to this by investing around $500 million in reducing the amount of electronic waste and in promoting sustainable development in the car industry.

Porter's Five Forces

Threat of New Entrants

The barrier to entry into the aftermarket for car sensors is moderate because of the need for special knowledge and technology. The market is growing, but the established players have strong brand loyalty and distribution channels that make it difficult for new entrants to win over a share of the market.

Bargaining Power of Suppliers

“The supplier landscape for sensors in automobiles is rather fragmented, with many suppliers offering similar products. This weakens the bargaining power of individual suppliers, which allows manufacturers to easily change suppliers and negotiate better terms.

Bargaining Power of Buyers

The bargaining power of buyers in the aftermarket for automobile sensors is high, owing to the availability of numerous substitutes and the possibility of comparing prices. As consumers become more knowledgeable and price-conscious, they are easily seduced by competitors and thus force suppliers to compete on price and quality.

Threat of Substitutes

There are a number of products that can serve the same purpose as automobile sensors. However, the specific requirements of the application and the technical integration of the products limit the threat of substitution. However, it is possible that new products will emerge in the future as a result of technological progress.

Competitive Rivalry

The competition in the aftermarket for car sensors is intense, with many competitors vying for market share. Price, quality, innovation and service are the key factors in this competition. As a result, companies are constantly launching new products, and this in turn leads to a lot of new advertising and marketing.

SWOT Analysis

Strengths

• Growing demand for advanced driver-assistance systems (ADAS) and autonomous vehicles.
• High compatibility of aftermarket sensors with various vehicle models.
• Strong technological advancements leading to improved sensor performance and reliability.

Weaknesses

• Limited awareness among consumers regarding the benefits of aftermarket sensors.
• Potential compatibility issues with newer vehicle models.
• Dependence on the original equipment manufacturers (OEMs) for technology and standards.

Opportunities

• Expansion of electric vehicles (EVs) creating new sensor requirements.
• Increasing focus on vehicle safety and regulatory compliance driving sensor adoption.
• Emerging markets presenting untapped potential for aftermarket sensor sales.

Threats

• Intense competition from OEMs offering integrated sensor solutions.
• Rapid technological changes leading to obsolescence of existing products.
• Economic downturns affecting consumer spending on aftermarket products.

Summary

Despite the fact that the market for automotive sensors is expected to grow from a substantial level in 2023, it is characterized by a number of strong factors, including the rising demand for advanced safety features and the ubiquity of sensors across a variety of vehicle models. However, challenges such as the lack of consumer awareness and the lack of support for newer vehicles continue to exist. Opportunities are presented by the growing electric vehicle market and the growing safety regulations. However, competition from original equipment manufacturers and rapid technological developments could affect the market. To optimize the opportunities for growth, a strategic focus on customer education and innovation is needed.