Automotive assembly market is estimated to be valued at USD 49.13 Bn in 2024, exhibiting a CAGR of 5.8% over the forecast period 2024-2031. Furthermore, integration of advanced technologies such as robotics and artificial intelligence is a key trend in the market.
Market Dynamics:
Global automotive assembly market growth is driven by two factors - integration of advanced technologies and increasing production of electric vehicles. With technological advancements, advanced robotics are being increasingly used on assembly lines to improve productivity and reduce production costs. Use of artificial intelligence and IoT enables the real-time process monitoring and predictive maintenance. The stringent emission norms are pushing automakers to boost electric vehicle manufacturing. Several governments are offering subsidies and tax rebates to promote electric mobility. This prompts original equipment manufacturers as well as emerging players to set up new production facilities and expand existing units for electric vehicles. Rapid establishment of charging infrastructure is also encouraging automakers to ramp up EV production. While advanced technologies are improving efficiency of assembly lines, growing electric vehicles is presenting new opportunities for supply chain players in the automotive industry.
Market Drivers
Increasing Demand for Personal Cars
One of the main drivers for automotive assembly market growth is rising demand for personal vehicles across both developed and developing nations. As economies grows and individual incomes rises, more consumers are able to afford their own car. This is evident in countries such as India and China where car ownership was previously low but has increased dramatically in recent years. The freedom and convenience offered by personal transport is highly valued by consumers, this is expected to boost demand for automotive assembly .
Growth of Electric Vehicles
Increasing popularity of electric vehicles (EVs) due to growing concerns over environmental impact, fuel efficiency and costs of vehicle ownership can also drive the market growth. While EVs still make up a small percentage of total car sales, production is ramping up significantly to meet ambitious national targets for phasing out fossil fuel cars in countries like the U.K., Germany and China. Automakers are heavily investing in EV assembly lines and battery production facilities to capitalize on this paradigm shift in automotive technology. Government policies like tax incentives are also stimulating both supply and demand in the EV space, thus, boosting demand for vehicle assembly plants.
Market Restraints
Rising Costs of Raw Materials and Components
One challenge faced by automakers is higher input costs, mainly due to fluctuating prices of raw materials and electronic components used in modern vehicles. Commodity price volatility makes it difficult to set stable long-term production plans and product pricing. Shortages and delays in parts supply during COVID-19 disruptions also constrained assembly line outputs. Relentless cost-cutting pressures and just-in-time manufacturing leave little flexibility to absorb cost increases. This thin profit margin environment can hamper the industry growth and potential new plant expansion.
Strict Emissions Regulations
Tightening emissions and fuel efficiency standards can hamper the market growth. Meeting increasingly stringent regulations requires expensive upgrades to powertrains, onboard technology, manufacturing processes and quality control systems. Non-compliance results in heavy fines that hurt company finances. While improving sustainability, stricter norms necessitate large research and development investments as well as factory retrofitting spend that tie up capital. This regulatory burden may deter or slow down new greenfield assembly facility launches for some automakers.
Market Opportunities
Growth in Emerging Economies
Emerging economies like India, Indonesia, Mexico and Egypt present a major opportunity, as motorization rates and living standards rise rapidly but remain relatively low as compared to developed markets. With large, youthful populations and expanding middle classes, there has been huge demand for vehicle in developing regions. This makes them attractive investment destinations for new assembly plants to cater to emerging local and export markets. Local manufacturing also enables firms to leverage lower costs and produce more affordable models tailored to each market.
Demand for Autonomous and Connected Vehicles
Advanced automotive technology areas like autonomous driving, connectivity, big data and artificial intelligence applications can also offer market growth opportunities. Huge R&D investments are underway to develop self-driving “robotaxis”, intelligent transportation systems and personalized in-vehicle services. This shift towards software-defined, electric vehicles will transform production needs, with demand forecast for specialized components and entire new platforms. Those automakers and suppliers early to pioneer autonomous assembly lines and upgrade existing facilities stand to gain a first-mover competitive advantage in leading this industry evolution.
Link: https://www.coherentmarketinsights.com/market-insight/automotive-assembly-market-5492
Key Developments:
- On February 26, 2024, Schaeffler, a global motion technology company, announced its plans to extend its operations in the U.S. by establishing a new manufacturing facility specializing in automotive electric mobility solutions. This expansion underscores the company's dedication to innovation and development in the Americas. With an investment exceeding USD 230 million, Schaeffler will construct the new manufacturing facility in Dover, Ohio, along with potential expansions in the state until 2032. Through an agreement with the State of Ohio and JobsOhio, Schaeffler will receive incentives such as grants and tax credits for these investments, which are expected to generate 650 job opportunities. These developments will spur growth not only at the current facility in Wooster, Ohio, but also at the new manufacturing site in Dover.
- In December 2023, Skoda an automotive manufacturer, announced an expansion of its collaboration in Kazakhstan with local partner Allur across various domains including sales, production, and training. This collaboration involves the gradual initiation of local assembly of Skoda Octavia, Kamiq, Karoq, and Kodiaq models from semi-knocked down kits in the first quarter. An MoU had been signed to evaluate the feasibility of locally producing vehicles from completely knocked down kits after 2025, which could potentially involve welding, painting, and final assembly processes, fostering employment in both Kazakhstan and the Czech Republic.
- On August 24, 2023, Mullen, a U.S.-based automobile company specializing in electric vehicles, commemorated the production launch of its Class 3 vehicles at its commercial assembly plant in Tunica, Mississippi. The event included factory tours, company presentations, rides and drives, and vehicle demonstrations, showcasing Mullen's focus on the production of Class 1 and Class 3 commercial EV vehicles.
Key Market Players
Key companies covered as a part of this study include Advanced Assembly, Assemco Outsourcing Melbourne Australia, Atlas Copco AB, Formel D, Fuji Assembly Systems, Inc., Gen Pack Assembly Services Inc., Ingemat S.L., JR Automation, Leidos, Magna International Inc. , Maruti Suzuki , Mercedes-Benz, Oliver Wyman, LLC. , Rhenus Group, Ricardo., Škoda Auto a.s, TOYOTA MOTOR CORPORATION, Zhengzhou Duoyuan Automobile Equipment Co., Ltd.
