Frost: Emissions, Safety Issues Fuel ASEAN3 Automotive Sensors Market
June 6, 2006
The ASEAN3 (Thailand, Malaysia and Indonesia) automotive sensors market is likely to grow as governments tighten environmental laws on fuel emissions, and as consumers become more concerned about vehicle safety, according to Frost & Sullivan.
The disposable income per person in ASEAN3 is on the rise, leading to increased spending on consumer products, including high-end cars. Analysts said this allows companies to pass on the cost of advanced technology to customers.
"The overall demand for sensors in vehicles in the ASEAN3 is also fueled by automakers' need to differentiate their vehicles from their competitors," said Frost & Sullivan research analyst Brijesh Sheregar G.
New analysis from Frost & Sullivan of the ASEAN3 automotive sensors markets found that revenues reached $74.2M in 2005, with estimates to reach $320.3M by 2011.
Cars introduced in the region employ new systems such as antilock braking system (ABS), which need inputs from more than three or four sensors. Sheregar said the increasing use of such systems is likely to expand, and ASEAN3 countries need to introduce stringent emission and vehicle safety norms based on the ASEAN free trade area (AFTA) agreement and subsequent discussions on the mutual recognition agreement (MRA).
The MRA stipulates that vehicles produced and tested in any country under AFTA be suitable for use anywhere else in the region. "Hence, such an agreement would require countries to follow uniform norms for vehicle emissions and safety, further promoting the sales of sensors in the ASEAN3 region," Sheregar said.
While these trends bode well for the ASEAN3 automotive sensors market, analysts said local companies have some challenges to face.
Sensors produced or imported by multinational corporations meet an estimated 85%-90% of the demand for automotive sensors in the ASEAN3 region. Companies such as Denso, Siemens and TRW import sensors and supply them to automotive companies or manufacture them in wholly-owned subsidiaries or joint ventures set up by them in these countries.
"Local manufacturers need to look at export markets if they are to sustain themselves," Sheregar said. "They need to aggressively promote their products in these markets and for this, there is an urgent need to upgrade their products to the exacting standards of automakers and align with the supply chain of global auto manufacturers."
Analysts said the lack of technical expertise coupled with inconsistent quality and restricted funds for investment in new projects are likely to hamper the growth of local automotive sensor companies.
Source: Frost & Sullivan.