Rise in disposable income has instigated the automotive OEMs to leverage the increasing purchasing parity of customers and add innovative features in the premium as well as budget segment automotive. Some of the most basic implementation of advanced features in budget segment includes infotainment systems, HVAC systems, image sensors, airbags, power window, and anti-lock braking system (ABS), whereas some of the modern features targeting the premium segment includes evasive steering, intelligent forward-collision warning, advanced driver assistance systems (ADAS), GPS vehicle tracking, and vehicle to vehicle communication. These technologies are directly reliant on electrical components such as sensors and semiconductors to transmit signals. As wire and cables are the most fundamental components installed for transmitting signal and power, global market for automotive wiring harness is gaining substantial traction. Moreover, robustly increasing sales of electrical vehicles (EVs) globally, including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) is a major trend disrupting the market. The entire engineering and mechanism in EVs is dependent and operates on electrical systems supported by wires and cables, thus wiring harness delivers a defense mechanism from electrical shortage and assists better performance of wires and cables in harsh conditions. Government initiatives, such as New Energy Vehicle mandate in China in support of EVs and federal regulations such as Federal Motor Vehicle Safety Standards (FMVSS) issued by United States Department of Transportation to incorporate advance automobile safety features are prime factors adding further impetus to the demand. The global automotive wiring harness market size is evaluated to be $82.45 billion and is progressing with a global CAGR of 5.34% during the forecast period 2019-2025.
Harnessing of Automotive Wire – A Predominant Operation in Electric Vehicles Manufacturing
‘Low Carbon Economy’ is a dynamic trend being implemented by several sectors globally including automotive. After an era of being scrutinized as marginal innovation, electric vehicles market owing to numerous aspects such as its implication as an alternative fuel transport, low-carbon emission, and effective interventions such as tax emptions from governments is witnessing robust growth. As indicated by the International Energy Agency (IEA), the fleet of electric cars on road will reach the mark of 125 million by 2030 leapfrogging from 3 million units recorded in 2017. Moreover, due to universal measures such as Sustainable Development Goals set by the United Nations General Assembly, to diminish carbon footprints and alleviate transportation sector from complete dependence on economically volatile fossil fuels, electric vehicle is the refuge sought globally. As a consequence, the bourgeoning demand for electric vehicles that employs nearly 3 times more wire than traditional internal combustion engine (ICE) vehicles is delivering an augmentation for production volume of automotive cables and wires, ultimately acting as a disruptive force for automotive wiring harness market demand.
APAC Dominates Global Automotive Wiring Harness Market Size with Intensifying Line-Up of Automotive OEMs and Rampantly Bourgeoning EVs Sales
Following an acute study of the regional markets of automotive wiring harness, APAC is estimated to be the most lucrative marketplace with a share of 41.34% in the global market as of 2018. Penetrating automotive OEMs centers in India, China and Japan amalgamated with the supremacy of China in the realm of electric vehicles stretching from cars and scooters to buses and heavy commercial vehicles is creating opportunities for automotive wiring harness in the APAC region.
Some facts in support of the argument-
· Out of the 10 largest global car manufacturing companies, 5 are headquartered in APAC. Toyota (Japan) is at 1st, Honda (Japan) at 6th, SAIC Motor (China) at 7th, Nissan (Japan) at 8th and Dongfeng (China) at 10th global ranking.
· APAC countries automotive sector is growing at an impeccable rate, with India witnessing an upsurge of (+7.98%), Indonesia (+10.31%), and Malaysia (+12.18%) as of 2018 (OICA).
· Out of 1 million electric cars sold globally in 2017, China had more than 50% share of the global trade. Almost 580,000 cars were sold in this region, an unprecedented 72% increase from the preceding year.
· With more than 200 million electric two-wheelers, 3-4 million low-speed electric vehicles and more than 300 thousand electric buses, China is the global leader in the electrification of transport sector.
· China, accounted for more than 99% of both electric bus and two-wheeler stocks globally in 2017. (IEA)
Government Initiatives in India and China for the adoption of EVs:
Unprecedented Government Funds Allocation-
Government of India in 2019 approved the application for enactment of scheme titled 'Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II)' for endorsing electric mobility in the nation. Followed by FAME India1 that was launched in 2015 and gathered central investments worth $128 million, Phase II witnessed an exuberant funding worth $1.4 billion in 2019. Such hike in investment towards EVs firmly depicts the positive stance of Indian government towards the novel automotive technology. This humongous investment will initiate indigenous production of EV, creating substantial demand in automotive wiring harness market.
Tax Exemption on Electric Vehicles:
Global economies are supporting electric vehicles consumers with incentives and tax exemption policies to promote the sales of EVs. For instance, in 2016, Chinese government provided strong financial and non-financial incentives to EV adoption such as exemptions from acquisition and excise taxes ranged $5000 to $8,500.
Automotive Wiring Harness Market – Growth Drivers:
· Evolution of the purpose of in-car infotainment systems from a mere mode of entertainment to a real-time updates delivering tool is uplifting the volume of automotive wiring harness. As modern systems are equipped with various electronic devices such as LCD, HVAC systems, semiconductors, and various types of sensors, wires and cables plays a vital role in its integration with vehicle. Hence, the flourishing in-car infotainment market size evaluated to be progressing at a global CAGR of 10.68%, is adding impetus to automotive wiring harness market demand.
· Development and adoption of modern automotive technologies such as semi-autonomous and autonomous vehicles, self-driving cars and trucks, advanced driver assistance systems (ADAS) and automotive artificial intelligence have rampantly increased the application of electronics and necessity for automotive electrification. This has resulted in more wire being employed in automotive manufacturing for transmission of power through the entire car. As a consequence, chassis harness that comprise of the main harness, front harness, and rear harness in automotive is progressing with the fastest CAGR of 6.23% going through 2025.
Automotive Wiring Harness Market Companies:
Some of the key players operating in the global market are Aptiv PLC, Delphi Automotive LLP, Furukawa Electric Co. Ltd, Sumitomo Electric Industries, Ltd., Lear Corporation, THB Group, Leoni AG, SPARK MINDA, Samvardhana Motherson Group, Nexans Autoelectric, Yazaki Corporation, and Yura Corporation.
Strong supply chain is imperative for success in this market and therefore, companies are focusing on mergers and acquisitions to expand geographically and gain ground over their competitor. For instance, Indian car wiring maker Motherson Sumi Systems Ltd, a cooperative undertaking between India’s Samvardhana Motherson Group and Japan’s Sumitomo Wiring Systems, has been seeking for a substantial acquisition with Leoni AG of Europe. The deal that is estimated to be worth more than $1 billion, Motherson Sumi will procure 180 facilities across 37 countries and strengthen foreign trades.
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