Research Overview
Price Pressure at Retail Level Passes on to all Participants in the
Automotive Value Chain
Vehicle manufactures in North America have been unable to significantly
increase retail prices for new vehicles in the past few years. Price increases
have also been offset by the growing rebates and zero percent annual percent
rates (APRs), which consumers now consider a standard operating procedure while
buying a new vehicle. System costs remain a huge challenge in a competitive
marketplace where consumers hold significant bargaining power. There is a
certain price-point in each vehicle segment beyond which consumers hesitate to
purchase optional equipment such as active safety systems. The pricing pressure
is permeating the entire value chain of participants, from automakers to Tier-1
suppliers of safety systems, and Tier-2 and Tier-3 suppliers. Suppliers of
active safety systems cannot hope to buck the trend of falling system prices and
need to continuously reduce costs through increased production efficiencies and
innovative manufacturing technologies. As a market pull, auto insurers offer
discounts on the premiums payable by consumers if their vehicles have certain
safety systems.
This Frost & Sullivan research evaluates the market for active safety
systems for light vehicles manufactured in North America. In addition to
drivers, restraints, challenges, market dynamics and trends, a detailed
opportunity analysis by vehicle segment and automakers is provided for each of
the systems covered. This service can help clients improve the accuracy of
business planning.
Publication of Crash Ratings is Leading to Higher Installation of Safety
Systems
The crashworthiness safety ratings published by National Highway Traffic
Safety Administration (NHTSA) and Insurance Institute for Highway Safety (IIHS)
are providing one of the key impetus toward higher installation of safety
systems. "The results of the tests receive wide publicity and are easily
accessible to the consumer anytime," says the analyst of the research.
"As a result, that segment of the new vehicle buying population that reads
the safety ratings now forms a substantial and growing portion of the total new
vehicle buying population."
Automakers are responding to this trend by installing active and passive
safety systems in order to meet the permissible injury criteria specified under
the New Car Assessment Program (NCAP) 5-Star ratings and the IIHS ratings. There
has been a marked increase in the deployment of occupant restraint systems such
as pre-tensioned seatbelts and occupant-sensing dual stage airbags. Automakers
are also following improved safety cage construction to meet the structural
performance and dummy kinematics criteria. Likewise, the new rollover propensity
ratings are expected to lead to higher installation of vehicle stability and
roll stability systems.
Competitive Pressures Drive Installation of Safety Systems
Fierce competition amongst the North American auto manufacturers for market
share has led to a product differentiation race, particularly for the medium to
top-end vehicle segments. Installation of safety systems is one of the tools at
the disposal of automakers to differentiate their vehicles, especially when
product parity on many basic functional features is getting closer. "While
competition in entry-level segments continues to be based on price, with product
parity much closer in the mid to higher-end segments, automakers see a greater
need to differentiate their vehicles," explains the analyst.
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