Mechatronics: The Future of the Automotive Industry
Business Editors/Automotive Writers
LONDON–(BUSINESS WIRE)–Jan. 6, 2004
The ever-increasing demand for ‘intelligent’ safety features and heightened comfort in vehicles has led to a corresponding boom in mechatronics. Mechatronics, a relatively new concept that combines mechanics, electronics and software technologies, is expected to revolutionise the automotive industry. Recent analysis by Frost & Sullivan (http://www.transportation.frost.com) expects the EUR5.2 billion European mechatronics market to reach EUR6.8 billion by 2010.
Suppliers of mechatronics systems and components are poised to benefit from end-user willingness to upgrade to newer systems. Thus, there is a huge market potential for advanced products, and enterprising vehicle manufacturers (VM) that use innovation to differentiate their products stand to gain in the long run.
Simultaneously, the demand for intelligent safety features incorporating sensors has risen in Europe. Features such as ABS that were confined to the upper vehicle segments have become an almost standard element across most passenger car segments.
Today, safety ratings have become an indispensable quality parameter and attaining a five-star safety rating is considered a brand statement. As a result, a large portion of a VM’s budget is allocated to integrating mechatronic components into safety features.
Matching the growth of safety features, comfort features too have become critical requirements for end-users in Europe. Mechatronics has provided a technical answer to the two primary demands of the comfort market: reducing the need for human interaction and increasing the degree of personalisation. For instance, features such as power seats, electronic mirrors and automatic climate control offer the benefits of memory functions and automatic actuation.
However, if the market for comfort-related features is to expand, there is an overriding need to reduce the costs involved. In a positive development, in areas where penetration of the system is already high or growing fast, mechatronic component prices are declining. This is particularly evident in the case of safety-related features such as ABS where the market is reaching saturation.
“In the long run, as some features become standard in certain — generally higher-end — segments, the cost of components will decline and thus spur the growth of those mechatronic systems in the lower segments,” remarks Soikot Sengupta, Research Analyst at Frost & Sullivan.
At present, where comfort features are concerned, most VMs cannot justify the high costs involved. Faced with the choice of opting for either a traditional or a mechatronics approach, most VMs tend to be guided by the cost factor.
“In order for mechatronics to become the first choice, suppliers need to develop cost-competitive systems by applying pressure on Tier 2 suppliers to decrease the cost of components and by creating multifunctional and flexible systems where one mechatronic system can house more than one feature,” suggests Mr. Sengupta.
Developing common standards between systems and across the industry is also likely to allow for cost leveraging by facilitating the sharing of components.
Inevitably, the current industry value chain is likely to be disturbed by the growth of mechatronics.
“The wild-life hierarchy in place for a long time in the industry, with pre-determined roles assigned to each level of the chain, will have to be restructured,” cautions Mr. Sengupta.
“The initial friction will be reduced over time. Only a close working relationship and knowledge sharing will open the door for advanced technologies and competitive advantage,” he adds.
Indeed, the current situation, if manipulated skillfully, can be a win-win situation for all the participants. In the past, proximity to the VM had been the sole prerogative of Tier 1 suppliers. Lately, Tier 2 suppliers are developing close working relationships with both VMs and Tier 1s. For Tier 1s, the integration of mechatronics allows for greater participation in VMs’ product strategies by offering a complete package with all the components integrated in the systems.
Mechatronics has also led to some degree of industry consolidation. For instance, a number of Tier 1 companies that manufacture mechanical parts have merged with or acquired electronics companies, thus augmenting their specialised skills with electronics expertise.
Exterior vehicle features are set to exhibit the fastest growth in the market, increasing from 8 percent to 20 percent over the period between 2003 and 2010. The rapid uptake of active headlights and keyless entry will underline the expanding revenue share of exterior features.
Revenues generated by interior vehicle features are expected to be relatively stable at 10 percent over the same time frame. This difference arises from the fact that while interior features are basically oriented towards comfort and luxury, exterior features such as active headlights and keyless entry are more utilitarian in nature.
Chassis features are expected to make a strong comeback by the end of the decade due to the high potential of by-wire technology.
Frost & Sullivan, an international growth consultancy, has been supporting clients’ expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients’ management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan’s network of consultants, industry experts, corporate trainers and support staff, spans the globe with offices in every major country.
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