Automotive Engineering Service Provider Market

Rising Automotive Demand for Connected Services to Drive Market Growth

Market CAGR for automotive engineering service provider is being driven by the rising automotive demand for connected services. Customers can remotely monitor and manage their cars via the manufacturer's mobile app when connected services are integrated into their vehicles. With the use of this phone, the user may quickly locate their vehicles. Using connected services technology, the user may also check the mileage of the vehicle, unlock the doors, and preheat the battery. With unique mobile applications and functionalities, connected services vary by automobile manufacturer.

Audi, for example, offers a connected service called Audi Connect, as well as a smartphone app called my Audi.

As a result, the development of linked services in accordance with OEM specifications is expected to drive the growth of the automotive engineering services market over the forecast period. The table below lists some of the mobile-connected services. Companies like WirelessCar are working to accelerate the development of connected vehicle technologies.

For instance, in July 2022, the WirelessCar is developing an Android Automotive Operating System with the assistance of Polester. With this, WirelessCar developed connected data services like Journey Log, which stores data in the WirelessCar cloud with all the track details of each journey taken. WirelessCar will work with Polester to accelerate the development of linked technologies, which assist will promote the market expansion of automotive engineering services.

The increasing demand for advanced driver assistance systems (ADAS) and connected automobile technologies is one of the factors driving the growth of the Automotive Engineering Service Provider Market. As these technologies become more common in modern automobiles, automotive engineering service providers are playing a growing role in assisting manufacturers in designing and developing these systems. Lane departure warning, adaptive cruise control, and blind spot recognition are examples of ADAS technologies that are becoming more widespread in new vehicles, and many buyers are ready to pay a premium for these features.

Furthermore, linked car technologies such as infotainment systems and vehicle-to-vehicle communication are gaining popularity, driving demand for automotive engineering services even higher.

Automotive engineering service providers are projected to play an increasingly vital role in the industry as demand for these technologies grows. These service providers provide a variety of services, such as design, testing, and validation, and are critical in assisting automakers in bringing new products to market swiftly and efficiently.

Moreover, the growing demand for electric cars (EVs) and hybrid electric vehicles (HEVs) is another factor driving the growth of the Automotive Engineering Service Provider Market. As more people opt for electric and hybrid vehicles, automotive engineering service providers play an important role in assisting manufacturers in designing and developing these vehicles.

As an example, engineering service providers can assist automakers in designing and optimizing battery management systems, which are crucial to EV and HEV performance and safety. They can also aid with the development of electric powertrains, which are critical to these vehicles' performance and efficiency.

The Global Automotive Engineering Service Provider Market Industry is poised for substantial growth, with projections indicating a market value of 186.3 USD Billion in 2024 and an anticipated increase to 390.9 USD Billion by 2035. This growth trajectory reflects a compound annual growth rate (CAGR) of 6.97% from 2025 to 2035. Such figures highlight the expanding role of engineering service providers in the automotive sector, as they adapt to evolving technologies and consumer demands. The market's expansion is likely to be driven by factors such as increased vehicle production, technological advancements, and the growing importance of sustainability in automotive engineering.

The increasing global emphasis on sustainability and environmental consciousness drives the demand for electric vehicles (EVs). As consumers and governments prioritize eco-friendly transportation, the Global Automotive Engineering Service Provider Market Industry experiences heightened activity. In 2024, the market is valued at 186.3 USD Billion, reflecting the industry's adaptation to new technologies and regulatory requirements. Engineering service providers are pivotal in developing EV technologies, including battery management systems and electric drivetrains, which are essential for meeting stringent emissions standards. This trend is expected to continue, with the market projected to reach 390.9 USD Billion by 2035.

Emerging markets present significant opportunities for the Global Automotive Engineering Service Provider Market Industry. As economies in regions such as Asia-Pacific and Latin America continue to grow, the demand for automotive engineering services is expected to rise. These markets are witnessing an increase in vehicle production and sales, driven by urbanization and rising disposable incomes. Engineering service providers are strategically positioning themselves to capitalize on these opportunities by establishing local partnerships and expanding their service offerings. This trend suggests a robust growth trajectory for the market, with the potential for increased revenue streams as manufacturers seek to optimize their operations in these regions.

The Global Automotive Engineering Service Provider Market Industry is significantly impacted by stringent regulatory compliance and safety standards. Governments worldwide are implementing rigorous regulations to ensure vehicle safety, emissions control, and environmental sustainability. Engineering service providers play a crucial role in helping automotive manufacturers navigate these complex regulations, ensuring that vehicles meet safety and environmental standards. This necessity for compliance drives demand for engineering services, as manufacturers seek to avoid penalties and enhance their market reputation. The ongoing evolution of regulations suggests that the role of engineering service providers will continue to expand, further solidifying their position in the market.

Investment in research and development (R&D) is a critical driver for the Global Automotive Engineering Service Provider Market Industry. As automotive manufacturers strive to innovate and remain competitive, they allocate substantial resources to R&D initiatives. This investment is particularly evident in the development of new technologies, such as electric and autonomous vehicles. Engineering service providers are often engaged in collaborative R&D projects, leveraging their expertise to accelerate innovation. The projected growth of the market, from 186.3 USD Billion in 2024 to 390.9 USD Billion by 2035, indicates that R&D investments will likely continue to fuel the demand for engineering services in the automotive sector.

Rapid technological advancements in automotive engineering significantly influence the Global Automotive Engineering Service Provider Market Industry. Innovations such as autonomous driving, connected vehicles, and advanced driver-assistance systems (ADAS) require specialized engineering services. These technologies not only enhance vehicle safety and performance but also align with consumer expectations for modern vehicles. As a result, engineering service providers are increasingly engaged in research and development to integrate these technologies into new models. The anticipated compound annual growth rate (CAGR) of 6.97% from 2025 to 2035 underscores the importance of these advancements in shaping the future of the automotive industry.

By region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The North American Automotive Engineering Service Provider Market area will dominate this market, due to rising demand for electric and hybrid vehicles, as well as a greater emphasis on safety and emissions rules in the region, are all contributing to the region's growing emphasis on safety and emissions standards.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure2: Global Automotive Engineering Service Provider Market Share By Region 2022 (Usd Billion)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Europe Automotive Engineering Service Provider Market accounts for the second-largest market share due to rising investments in automotive electrification and autonomous technology. Further, the German Automotive Engineering Service Provider Market held the largest market share, and the UK Automotive Engineering Service Provider Market was the fastest growing market in the European region

The Asia-Pacific Automotive Engineering Service Provider Market is expected to grow at the fastest CAGR from 2024 to 2032. This is due to the growing adoption of EVs in the region. Moreover, China’s Automotive Engineering Service Provider Market held the largest market share, and the Indian Automotive Engineering Service Provider Market was the fastest growing market in the Asia-Pacific region.

Leading market players are investing heavily in research and development in order to expand their product lines, which will help the Automotive Engineering Service Provider Market, grow even more. Market participants are also undertaking a variety of strategic activities to expand their global footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, Automotive Engineering Service Provider industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the global Automotive Engineering Service Provider industry to benefit clients and increase the market sector. In recent years, the Automotive Engineering Service Provider industry has offered some of the most significant advantages to medicine. Major players in the Automotive Engineering Service Provider Market, including HARMAN International (USA), EDAG Engineering GmbH (Germany), IAV Automotive Engineering, Inc. (Germany), Magna International Inc (Canada), Imaginative Automotive Engineering Services (India) and others, are attempting to increase market demand by investing in research and development operations.

Harman International Industries, or just Harman, is an American audio electronics manufacturer. The company has been operating as an independent subsidiary of Samsung Electronics. In September 2022, Harman International (Harman) has announced the debut of its new Ready Care service, which identifies driver behaviour and gives solutions for safer driving. To increase driver safety, it provides solutions such as Cognitive Distraction, Stress-Free Routing, and Personalized Comfort, in addition to Herman's connected car solutions.

FEV India Pvt. Ltd. is a subsidiary of FEV Group, a German-based global engineering services supplier. The company offers design and development, testing and validation, and system integration services for the automotive and transportation industries. FEV India was founded in 2008 and is based in Pune, India. A team of experienced engineers and technicians collaborates directly with clients to develop creative solutions for a variety of automotive and transportation applications. In April 2022, FEV introduced the FEV io Intelligent Mobility Software, which combines the company's expertise in intelligent mobility, software development, and novel power solutions.

As part of this offering, ADAS and connection services for the automobile industry will be provided in an all-inclusive software suite.