Boom time for automotive electronics in India?

USA: For a number of years, it has looked as though continued growth in demand for automotive electronics will depend on emerging new markets. Recently, this has become particularly pertinent as the economies of established markets have slowed and vehicle sales have started to fall. One of the countries where demand for automotive electronics could continue to grow quickly is India. With car ownership at only 7 per 1,000 people, and strong overall Indian economic growth, the potential is great.

A recently published report from IMS Research entitled: “The Indian Market for OEM Automotive Electronics” predicts that electronic content will become more advanced with each new generation of vehicle produced in India. Some of this advancement will be legislatively dictated; for example, the mandating of immobilisers on all new cars from October of this year; but there other factors.

One of them is demand from a rapidly growing middle class, who not only have more disposable income and easier access to finance than before, but are also trying to define their status as successful and prominent individuals. As a result, fitment of convenience and comfort systems is forecast to grow quickly. Electric windows, electric seats, cruise control and tyre pressure monitoring are all expected to become more common over the next decade. At the same time, park assist, satellite navigation and passive vehicle entry will start to feature in Indian vehicles for the first time.

According to report author Parmjit Bhangal: “It may sound like happy days for suppliers in India, and they do have lots of opportunity, but it isn’t quite smooth sailing into the bulging profits sunset. India is still an emerging market, and is highly price sensitive.”

This does cause vehicle manufacturers some difficulty, as they must produce vehicles with ever more technologically advanced features but without raising the cost of the vehicle by much. As a response, their suppliers must find innovative and economical ways of producing systems at much lower costs for the Indian market.

Many suppliers seem willing to accept the challenge of doing business in India. The report reveals that suppliers for most systems are already a mix between international and domestic companies. For example, the top three suppliers of instrument clusters include one domestic supplier, one joint venture and one international supplier. The report also predicts that as more and more international companies realise the potential for developing and producing in India, exports of many systems will increase.

Just how fast the Indian market for automotive electronics grows will depend on a variety of factors. For example, one important issue is continued improvement to road infrastructure. This is expected to have a great influence on uptake of advanced safety systems. There are many other factors but well placed suppliers have the chance to take advantage of that rarest of things: a booming market.