Automotive Engineering Services Market

The global Automotive Engineering Services Market is valued at USD 161.49 Billion in 2024 and is projected to reach a value of USD 371.89 Billion by 2035 at a CAGR (Compound Annual Growth Rate) of 7.89% between 2025 and 2035.

Premium Insights

The market for Automotive Engineering Services is expanding rapidly, mostly due to the rising demand for cutting-edge car technology and the quick spread of electric and driverless vehicles. A number of important variables explain this rise. First, there is a growing need for engineering services due to manufacturers' significant investments in R&D to improve vehicle safety and meet strict emission rules. The move to electric and driverless cars is also accelerating innovation in fields like connectivity, battery technology, and self-driving algorithms, which is increasing the need for specialized engineering knowledge. Moreover, the competitiveness among automotive businesses has intensified due to globalization, calling for an emphasis on efficiency and cost-effectiveness, which engineering services can offer. Lastly, engineers are now able to create and incorporate these characteristics into contemporary cars, increasing their appeal to buyers, thanks to the integration of digital technology and the Internet of Things (IoT) in autos.

• The growing demand for environmentally friendly and fuel-efficient vehicles is a significant driver for the Automotive Engineering Services market.
• Software will continue to assert its dominance by type, capturing the largest market share globally throughout the forecast period 2025 to 2035.
• In 2024, North America exhibited its market prowess, achieving the highest revenue share of over 40%.
• The Asia Pacific region is poised for remarkable growth, displaying a noteworthy Compound Annual Growth Rate (CAGR) between 2025 and 2035.

Top Market Trends

1. One significant development is the move toward electric cars (EVs). The design and optimization of EV components, such as batteries and powertrains, is becoming a major component of engineering services. As governments across the globe strive for lower emissions, manufacturers are depending more and more on engineering know-how to create effective and sustainable electric transportation solutions.
2. The development of driverless vehicles is still driving the market. To make self-driving cars a reality, engineers are concentrating on creating cutting-edge sensor technology, machine learning algorithms, and safety systems. The promise of improved consumer convenience and safety is what is driving this trend.
3. The automotive sector is adopting digitization, emphasizing smart features and linked vehicles. These days, Automotive Engineering Services include improving in-car infotainment systems, developing strong cybersecurity solutions, and incorporating IoT technologies. This trend is being driven by consumers' need for sophisticated features and seamless connectivity.

Economic Insights

The COVID-19 epidemic and other economic insights have had a tremendous impact on the Automotive Engineering Services business. A 2020 worldwide economic slowdown brought about by the pandemic, according to an International Monetary Fund (IMF) assessment, resulted in lower consumer spending and a decline in car sales. The market was significantly harmed by this, experiencing a brief drop in demand for engineering services as a result of supply chain interruptions and manufacturing stoppages experienced by automakers. Nonetheless, the industry is expanding as the world economy progressively improves, propelled by a renewed emphasis on innovation to satisfy shifting consumer demands and environmental laws. Engineering services have gained traction as the automobile sector turns to electric and driverless vehicles in order to meet sustainability standards, offering growth prospects. A move toward online sales and distant collaboration was also expedited by the epidemic, underscoring the necessity for sophisticated engineering solutions to facilitate these changes. Although COVID-19 presented difficulties at first, it has also encouraged creativity and adaptability in the Automotive Engineering Services industry.

Market Segmentation

The Global Automotive Engineering Services Market is categorized into the below-mentioned segments as:

{{Segmentation_Ext}}

Based on Type

Software Products to Witness Significant Share Owing to Increasing Focus on Modern Cars

In 2024, software products to witness a significant share in the Automotive Engineering Services market, and several important factors will contribute to this dominance. Software now plays a crucial role in many aspects of modern cars, such as entertainment, engine management, advanced driver assistance systems (ADAS), and autonomous driving capabilities. The quick development of hybrid and electric cars also greatly depends on complex software for energy optimization and battery management. Software also makes it possible for vehicles to be connected, which is something that customers want as they anticipate easy connection with their digital life. Software developments agility makes it possible to update and enhance frequently, which is essential for maintaining competitiveness in a market that is always changing. Because of this, software is given a lot of attention in the automotive engineering industry in order to promote innovation, improve safety, and satisfy changing customer and manufacturer needs.

Based on Application

Safety Systems to Account for Considerable Share Owing to Increasing Focus on Safety

In 2024, the Safety Systems product category in the market for Automotive Engineering Services held a substantial share. Safety is given utmost priority in the automotive sector, which is the main reason for its predominance. Increased investments in safety technology are the result of stricter laws and consumer demand for safer vehicles. Airbags, collision avoidance systems, adaptive cruise control, and lane-keeping assistance are just a few of the many parts and functions that make up safety systems. All of these parts and functions require complex engineering and integration. Furthermore, since autonomous driving systems are designed to lower the number of collisions and fatalities on the road, safety and technological improvements are tightly related. Because of this, safety systems are the main focus of automotive engineering efforts, with the ultimate goal of saving lives through improving vehicle safety and lowering human error.

Based on Location

Outsourcing-based Services to Witness Significant Share Owing to Increased Focus on Global Talent

In 2024, outsourcing-based services have a significant share in the market for Automotive Engineering Services. A number of important variables can explain this prevalence. Through outsourcing, automotive businesses may access a vast global talent pool of highly skilled engineers and specialists, enabling them to use a wide range of competencies and expertise. It also has financial benefits because it removes the need to keep internal teams, which lowers overhead and running costs. Additionally, outsourcing gives businesses flexibility by letting them scale up or down their engineering efforts in response to project demands. This strategy makes use of the knowledge of engineering service providers, who are frequently at the forefront of technological advances, to promote efficiency and creativity. Outsourcing has emerged as the go-to strategy for automakers looking to stay competitive and economical while satisfying the ever-changing demands of the market.

Based on Region

North American Services to be Valued at the Maximum owing to Increasing Automotive Sales

In the market for Automotive Engineering Services, North America is thought to have the highest sales volume. The regions well-established automotive sector, technical advancements, and robust customer demand for cutting-edge automobiles are all responsible for its domination. Major automakers and tech businesses are based in North America, and they are aggressively investing in electric and autonomous technologies, which call for high-end technical services. Strict safety and pollution standards also drive the need for engineering solutions.

The region where the market is expanding at the fastest rate is Asia Pacific. The manufacturing and consumption of automobiles are rising rapidly in the Asia Pacific area, which China and India primarily dominate. Urbanization, growing middle-class wages, and growing environmental consciousness are the main drivers of this rise. There is an exponential growth in demand for engineering services to produce bespoke automobiles and advanced technology as manufacturers increase their presence in this region and adjust to local preferences.

Competitive Landscape

The market for Automotive Engineering Services is characterized by a mix of well-established industry titans and quick-thinking upstarts. AVL, Bertrandt, Bosch Engineering, and other major manufacturers use their wealth of resources and experience to hold a sizable portion of the industry. Meanwhile, more recent arrivals with creative ideas, like Magna International and Ricardo, are advancing. The battle is also getting more intense as international tech companies like Apple and Waymo, a division of Alphabet, investigate automotive engineering. As businesses look to expand their capacities in electric and autonomous technologies, the industry is defined by partnerships and acquisitions, creating a dynamic and ever-changing environment.

The key players in the global Automotive Engineering Services market include - Harman International (U.S.) among others.

Recent Market Developments

• A strategic agreement was made in February 2021 between AVL and Batemo on the development of virtual batteries. The partnership between AVL and Batemo aims to compile expertise in battery modeling so that customers may receive guidance in design, function and system development, fleet operation, and battery testing.
• In the area of developing virtual batteries, AVL and Batemo formed a strategic alliance in February 2021. By combining their expertise in battery modeling, AVL and Batemo hope to provide customers with guidance on fleet operation, design, function and system development, and battery testing.

Segmentation of the Global Automotive Engineering Services Market