SOURCE: The Freedonia Group, Inc.

July 13, 2005 12:09 ET

World OEM Automotive Electronics Demand to Reach US$124 Billion in 2009

CLEVELAND, OH -- (MARKET WIRE) -- July 13, 2005 -- World demand for automotive electronics for original equipment manufacturer (OEM) use is forecast to advance 7.5 percent annually to US$124 billion in 2009, much more rapidly than vehicle production itself. Some electronics systems are maturing in North America, Western Europe and Japan, and in these developed markets the industry is entering the next phase of evolution, characterized by strong demand for safety, entertainment and communications systems. Growth in emerging markets is being driven by the continued introduction of electronic systems designed to improve safety, efficiency and emissions control. These and other trends are presented in World OEM Automotive Electronics, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

Consumer unwillingness to increase spending for the latest electronic systems across the Triad (the US, Western Europe and Japan) has throttled back expectations by OEMs regarding some newer technologies such as navigation, wireless and telematics systems. The industry's mandate has thus become increased functionality without increased prices, which is driving cost-effective electronics systems into the automotive platform globally. The best growth prospects are emerging in several market segments, particularly safety (both active and passive safety systems), entertainment electronics (mobile Internet, video and gaming systems), and power electronics, which are designed to handle and coordinate the rapidly growing electric power requirements of newer vehicles. Electronics growth in emerging markets is being helped by the rapid transfer of new product designs from Triad markets -- a change from the past, when obsolete designs were used in nascent markets.

The developed nations of the world (the United States, Japan and many of the nations of Western Europe) will continue to account for the majority of demand for OEM auto electronics, since demand is linked directly to light vehicle production. The trend by automakers to site their vehicle production operations globally to take advantage of lower cost labor, reduced transportation costs and more favorable tariff rates will increasingly cause a shift in the geographic distribution of electronics demand as well, with tier one suppliers establishing plants to feed local demand.

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