The rate of growth in automotive electronics is slowing, and the balance of power in the industry is shifting, according to industry guru Paul Hansen, publisher of The Hansen Report.
Hansen spoke on "Trends in the Automotive Electrical and Electronics Domain” at Mentor Graphics’ sixth Integrated Electrical Solutions Forum for the Automotive Industry. The forum was held on Dec. 4 in Dearborn, MI.
“One of the toughest issues we are facing as an industry is the fact that our market, which has been growing at roughly 6% or 7% per year, will slow to perhaps 5% as the penetration of electronics into the average vehicle plateaus,” Hansen said.
“New features will continue to make their way into the typical vehicle, but they will come at the expense of what is already onboard,” he added. “Many existing parts go down in price each year by 3-5%. Additional price reductions come as parts are eliminated by way of integration.”
Hansen told Forum attendees that with penetration leveling, market growth can only come if carmakers sell more light vehicles at a higher price. “Twenty to 25% of the cost of today’s average new vehicle comes from electronics and electrical parts, and that won’t significantly rise until there is a fundamental shift in the powertrain—such as to fuel cells or a high penetration of hybrids,” he said.
According to Hansen, there has been a noticeable shift in the center of auto electronics industry influence away from Detroit and toward Stuttgart, Wolfsburg and Munich, and toward Japan. “Successful carmakers breed successful suppliers,” he said, adding that the success of Honda and Toyota has had a negative effect on Ford, GM and Chrysler. And that has led to serious difficulties for some U.S. suppliers, especially the parts suppliers spun off from the Big Three.” Similar trends are under way in the German auto industry, he said.
Hansen also identified active safety, fuel consumption and emissions, and portable device connectivity as categories where intense development is under way, and he discussed the importance of AUTOSAR, FlexRay, and MOST network standards.
“Once it’s fully implemented, AUTOSAR promises multibillion dollars in hardware and software savings to automakers each year,” Hansen said, “but, given the slow pace of adoption thus far, it will be more than a decade before AUTOSAR’s benefits are fully realized.”