Growth Forecast for Automotive Sensor Market but Margins Remain Tight

A new analysis from Frost and Sullivan and the North American automotive OE sensor markets reveals the industry generated $2.18 billion (U.S.) in 2002 and forecasts total market revenue to reach $4.15 billion (U.S.) in 2009.
At one time automotive sensors were on the leading edge of technology. Automaker’s strong buying power and sharp competition have forced suppliers to lower prices to stay competitive.
“Cost can be reduced by minimizing inventories and thereby warehousing, financing, managing requirements, automation and quality control programs can improve quality and cut down waste and scrap,” says Frost and Sullivan senior industry analyst Joerg Dittmer.
New sensors were usually able to draw high prices but once competitors launch similar ones profit margins are reduced. Research and development are key to high returns.
Suppliers have responded to automakers’ demands to produce durable and reliable components with high-tech products such as wide-range oxygen sensors.
“Modern sensor manufacturers have to apply electronic rather than mechanical controls, use new materials that last longer or need less maintenance and design improvements that enhance quality while reducing weight to be chosen over traditional technology,” says Dittmer.
Moving production to low-wage areas such as Asia will greatly benefit participants especially if the production process is labour intensive. Sensor manufacturers will have to find the balance between seeking low labour costs and providing just-in-time delivery.