PUBLISHER: AnalystView Market Insights | PRODUCT CODE: 1490281
PUBLISHER: AnalystView Market Insights | PRODUCT CODE: 1490281
Automotive Contract Manufacturing Market size was valued at USD 66,128.92 Million in 2023, expanding at a CAGR of 10.13% from 2024 to 2032.
The process of outsourcing is known as "Contract Manufacturing," in which a third-party company is hired to construct the complete vehicle for a certain brand. Contract manufacturing firms construct numerous automobiles for numerous OEMs in their own assembly and production facilities.
Automotive Contract Manufacturing Market- Market Dynamics
Cost-effectiveness, high scalability, and a growing need for risk mitigation are expected to propel market demand
Through the outsourcing of manufacturing operations to specialist organizations, contract manufacturing enables automotive companies to reduce their production costs. Labor cost arbitrage, supply chain optimization, and economies of scale are common ways to attain this cost efficiency. Furthermore, contract manufacturers provide scalability and flexibility in manufacturing, enabling automakers to modify production levels in response to market demands without having to make investments in new facilities or personnel development. The possibility of overcapacity or underutilization of resources is decreased by this flexibility.
Automotive firms mainly concentrate on their core strengths, which include design, engineering, marketing, and distribution, by outsourcing their production activities. Businesses can focus on areas where they have a competitive edge and spend resources more effectively by outsourcing manufacturing chores to contract manufacturers. Contract manufacturing reduces the risks brought on by shifts in regulations, obsolescence of technology, and variations in demand. Automotive businesses can minimize operational risks and prevent supply chain interruptions by spreading their production among multiple contract manufacturers or regions.
Automotive Contract Manufacturing Market- Key Insights
As per the analysis shared by our research analyst, the global market is estimated to grow annually at a CAGR of around 10.13% over the forecast period (2024-2032)
Based on Product Type segmentation, the design & development segment was predicted to show maximum market share in the year 2023, owing to automaker's high focus on design & development.
Based on Application segmentation, the passenger cars segment was the leading Application in 2023, due to the high demand for contract manufacturing in passenger car production.
Based on End User segmentation, automotive segment was the leading End User in 2023, mainly due to increased utilization of contract manufacturing solutions in the automotive industry.
On the basis of region, Asia Pacific was the leading revenue generator in 2023, owing to the high growing automotive sector.
The Global Automotive Contract Manufacturing Market is segmented on the basis of Product Type, Application, End User, and Region.
The market is divided into four categories based on Product Type: design and development, vehicle assembly, automotive electronics, and component manufacturing. The design & development segment dominates the market. The automotive electronics segment is expected to grow at the fastest CAGR with the advent of new technologies.
The market is divided into four categories based on Application: two-wheelers, passenger cars, commercial vehicles, and construction & agricultural vehicles. The passenger cars segment dominates the market. The increasing demand for automotive contract manufacturing in car design & development is enhancing the segment growth.
The market is divided into four categories based on End Users: automotive, construction, agriculture, and others. The automotive segment dominates the market and is expected to maintain its high dominance during the forecast period. The rising demand from the automotive sector for vehicle manufacturing is increasing the demand for contract manufacturing solutions.
Automotive Contract Manufacturing Market- Geographical Insights
Geographically, this market is widespread in the regions of North America, Latin America, Europe, Asia Pacific, and the Middle East and Africa. Asia Pacific is estimated to dominate the global Automotive Contract Manufacturing market owing to an increased number of automotive hubs across Asian countries like China, India, Indonesia, Vietnam, etc. China is a major hub for contract manufacturing, offering cost-effective labor and a vast supplier ecosystem. These regions are further split as per the nations bringing business for the companies.
The Automotive Contract Manufacturing Market is fragmented in nature and formulated by domestic & international players. Market players engage in product development, strategic partnerships, collaboration, etc. to increase their reach. For example, Magna Steyr has been involved in the production of electric vehicles, including the manufacturing of electric vehicles for various brands. Magna Steyr continues to invest in advanced manufacturing technologies and facilities to meet the evolving needs of the automotive industry. Some of the recent developments by companies are mentioned below,
In 2023, Valmet Automotive has expanded its focus on electric mobility and has been involved in manufacturing electric vehicles and battery systems for electric vehicles.
In 2023, EDAG Engineering Group AG, has expanded its presence in key automotive markets and invested in digitalization and Industry 4.0 initiatives.