ENGLAND, UK: In recent months the credit crunch has been amplifying a steady decline in car sales, particularly in the United States. The tight credit environment is clearly hurting car dealers and vehicle manufacturers, but what about the rest of the automotive industry?

There are several hard-hitting factors affecting the industry at the moment: the recent higher plateau of fuel prices, increasing raw material prices and greater pressure from impatient investors, shareholders and banks. However, the most imminent and by far potentially the most damaging threat has now become the scarce availability of credit. This hits consumers, many of whom are willing to buy a car but now find they cannot get financing, as well as the automotive suppliers, who cannot carry on without solid financial backing.

The consequences are evident throughout the industry, with vehicle manufacturers cutting down on shifts, suppliers revising their earnings expectations, and auto dealers slashing prices. The stress is even greater on the smaller Tier Two and Tier Three suppliers who make parts for the Tier One suppliers. Many are likely to go out of business or to be consolidated.

Now here is the silver lining: despite declining forecasts for vehicle production and sales there are several electronic systems that are likely to see continued increasing demand. “We are not only talking about electronic stability control, which will see a significant increase in fitment rate due to legislation, but also there are other systems for which we expect higher demand,” says Helena Perslow of IMS Research. She continues, “electric power steering is one example, adaptive headlights is another. Driver assistance systems in particular look like they will be able to ride out this storm.”

Relatively new systems such as lane departure warning (LDW) and self parking systems that are generally only available as options are sure to increase in demand. IMS Research’s latest report, “OEM Automotive Electronics – The World Market for Systems and Semiconductors 2008 Edition”, forecasts that the fitment of self parking systems in new vehicles is expected to increase from the current 125,000 per year to almost 2.5 million in 2016. Valeo on its own, for example, has another nine vehicle models to equip for 2010.