Frost: New Technology Will Direct Euro Auto Safety Systems Market

June 1, 2006

In trying to achieve technology refinements, cost and reliability are emerging as major challenges for the launch of advanced braking systems in the European market. With respect to stability control systems, Frost & Sullivan analysts said low customer awareness, perception and willingness to pay will likely be critical growth restrains. While efficient marketing campaigns could help overcome challenges associated with stability control systems, greater R&D efforts will be crucial to the growth of advanced braking systems.

Recent analysis from Frost & Sullivan found that the European market for advanced braking systems earned revenues of €5.1 billion in 2005, with estimates to reach €5.4 billion by 2012. Similarly, the European market for stability control systems earned revenues of €1.61 billion in 2005 and should reach €3.67 billion by 2012.

With a market share of more than 95%, hydraulic braking systems dominate the European braking systems market today. The only other braking system commercially available in the market is electronic hydraulic braking (EHB) and despite its success in hybrid vehicles, such as Toyota Prius and Honda Civic Hybrid, analysts said EHB systems have failed to compete against hydraulic braking systems in gasoline/diesel vehicles due to high cost and reliability issues.

"Starting early next decade, with the expected launch of brake-by-wire systems such as electronic wedge brake (EWB) system and electro-mechanical braking (EMB) system, the domination of hydraulic braking systems is set to decline and hydraulic braking systems will move from a market maturity phase to market decline phase in its product life cycle," said Frost & Sullivan research analyst Krishnasami Rajagopalan. "Similarly, standard ESP systems are likely to become original equipment (OE) fitments, while advanced ESP systems will see a greater uptake in the market."

However, analysts said key restraints for advanced braking systems such as EHB, EMB and hybrid braking systems include cost, reliability and after-sales serviceability. Also, with low awareness of the benefits of ESP systems and their role in overall vehicle and passenger safety, many customers consider them a comfort commodity, rather than a safety necessity.

With ongoing R&D activities, analysts said system suppliers and vehicle manufacturers are likely to overcome these restraints by the end of the decade. Suppliers are actively working with automotive manufacturers to develop an advanced braking system which can work on the present 12V system without a need for a higher voltage system such as the 42V system. According to Frost & Sullivan, costs are likely to reduce within years of its introduction, depending on the efficiency of this new system.

"The key to the success of advanced braking and stability control systems is in designing a reliable braking system which offers maximum benefits to both vehicle manufacturers, as well as end-users," said Rajagopalan. "Further, in ensuring maximum market penetration, the system has to be priced strategically and should cater to the needs of different vehicle segments."

Source: Frost & Sullivan.