Automotive TIC Market Size, Share & Trends Analysis By Service Type (Testing, Inspection, Certification), By Vehicle Type (Passenger Cars, Commercial Vehicles), and Regional Forecasts, 2021-2028

The global automotive testing, inspection, and certification (TIC) market was valued at $16.7 billion in 2020 and is projected to grow from $19.3 billion in 2021 to $28.5 billion in 2028, exhibiting a compound annual growth rate (CAGR) of 5.75% during the 2021-2028 period.

The COVID-19 pandemic delivered an unprecedented and staggering negative demand shock to the automotive TIC market across all regions in 2020. Despite 15.5% growth in 2020 versus average 2017-2019 year-over-year growth, the market contracted amid the pandemic. The projected 5.75% CAGR from 2021-2028 reflects a return to pre-pandemic growth trajectories driven by demand recovery as pandemic impacts recede.

Automotive certification relates to certifying automobiles or specific components as per the requirements of numerous statutory regulating organizations. Automotive testing and certification are critical to achieve regulatory requirements. Here, these services help raise production standards by testing, inspecting, and certifying products according to legislation worldwide. They assure that commodities are safe, dependable, sustainable, and high quality.

The growing number of occurrences of component failure in autos resulted in a rise in the use of TIC. Component failures cost the organization a significant amount of money and consumer discontent. Furthermore, the industry's key vendors' challenges of maintaining the quality of their vehicles have created new prospects for the market. For instance, in March 2021, Jaguar Land Rover reported that more than 100,000 sales are affected annually owing to quality difficulties, resulting in a negative reputation. The company intends to address the quality issue with a new business strategy.

Lockdowns and Restrictions due to COVID-19 to Hamper Market Growth

COVID-19 has posed significant economic and healthcare difficulties to the world. The disease's rapid spread had a huge influence on the global automotive sector, resulting in a drop in vehicle demand. The COVID-19 pandemic has spread to multiple countries and caused a global economic downturn. Strict precautions are taken to limit the coronavirus significantly, which impacted the market landscape.

Manufacturing units worldwide have been shut down, and vehicle sales have plummeted due to the coronavirus's spread. Volkswagen, Fiat Chrysler Automobiles, Ford, BMW, PSA Group, Rolls-Royce, Ducati, and Tesla are among the global automotive firms that have halted production due to COVID-19 outbreak. With economic and industrial activity essentially halted, a significant demand-side impact is projected, resulting in a dramatic decrease in car sales volumes. As this expansion is directly tied to automobile production, the scenario is projected to impact the market.

COVID-19, on the other hand, is hastening the digitalization of the automotive TIC sector. Automotive TIC businesses use digital software systems to conduct audits, damage assessments, and certifications. For example, Bureau Veritas has developed customized digital tools to facilitate remote operations for various industries. Hence, though COVID-19 posed a challenge to the growth of this market, it also provided new opportunities.

LATEST TRENDS

Increasing Digitization to Set a Positive Trend for Market Growth

The COVID-19 pandemic has accelerated the market's digitalization trend, with some of the world's largest corporations investing in TIC software solutions. Furthermore, government authorities accept remote testing, which aids in the market's expansion. The German KBA (Kraftfahrtbundesamt), the Irish NSAI (National Standards Authority of Ireland), the Dutch RDW (Rijksdienst voor het Wegverkeer), and the Luxembourgish SNCH (Société Nationale de Certification et d'Homologation) all accept TUV SUD's remote TIC services for automobiles.

Furthermore, periodic technical inspection (PTI) is a law enforced by several governments, including the U.S. and Germany to ensure that vehicles on the road are in good technical condition and comply with safety and pollution regulations. The country's transportation department inspects passenger and commercial motor vehicles to ensure that all parts and components are in excellent operating order to improve traffic safety. As a result of COVID-19, most PTI was completed using emerging digital technologies such as smart sensors, cloud, and data analytics. As a result, the market in the region will rise as more countries mandate PTI.

DRIVING FACTORS

Rising Focus of Governments for Imposition of Strict Regulatory Standards on Automotive Industry to Drive Market Growth

Various regulatory rules concerning passenger safety and environmental concerns (pollution, emission levels, and noise) apply to the global automotive sector. These regulations/standards directly impact the design of vehicle components. By law, automakers must include safety measures such as airbags and seat belts in their vehicles. Major regulatory organizations employ tariffs and other trade barriers to punish and deter firms that violate pollution and safety standards. This factor forces automakers to design fuel-efficient vehicles with lower emissions systems, such as exhaust gas recirculation (EGR) systems, turbochargers, and catalytic converters, while also including safety features such as electronic brake-force distribution (EBD), airbags, anti-lock brakes (ABS). Hence, due to strict regulations implemented by the governments globally, the demand for these services is expected to boom during the forecast period.

Increasing Penetration of Internet of Things (IoT)-based Technology to Fuel Market Growth

The Internet of Things (IoT) is a network of interconnected computing devices that exchange data for executing a task without requiring human interaction. Testing and inspection of the software powering the smart digital systems will become as vital as hardware testing & inspection as the linked gadgets, mobile payments, and connected autos are becoming more prevalent. For instance, AsiaInspection, a quality control and compliance firm, performs product inspections, laboratory testing, and supplier audit programs. AsiaInspection's customer interface has been digitized such that the inspection is completed within 48 hours after making an appointment, and a thorough report is provided online the same day.

RESTRAINING FACTORS

Varying Regulations/Standards Across Regions to Restrain Market Growth

Distinct regional norms and standards are expected to create challenges to product acceptability worldwide as trade and businesses become more globalized. This factor leads to local and international standard inconsistencies and stifling market expansion. Discrepancies in tax rates result from differences in regulatory requirements across different regions, resulting in additional expenditures for businesses (handle tax-related issues to hiring local staff). Local laws apply to TIC firms, and they must follow the regulations and conventions of the countries in which they operate. Therefore, this may limit their efficiency.

MARKET SEGMENTATION

By Service Type Analysis

Testing Segment Dominates the Market due to Widespread Applications

The market is segmented into testing, inspection, and certification based on service type.

The testing type dominates the classification of service types and is anticipated to exhibit the highest CAGR throughout the forecast period. Testing is the most significant aspect of the automobile industry as it helps manufacturers in decision-making to meet predetermined specifications. Testing and analysis services help ensure that the products and commodities have the attributes that customers need. According to statutory standards, rules, and specifications, the test is primarily determined experimentally, and on-site testing is available for only manufacturing and process industries. The service providers work on building a massive global network of laboratories. Their facilities are strategically positioned for the convenience of their clients, allowing easy accessibility from ports and major production hubs. They offer an array of laboratory equipment and field-specific technical experience. To avoid fatal errors, businesses with minimal spending patterns in the automobile industry conduct testing and then introduce the product to the market.

Inspection and verification of OEM component manufacturers offer performance testing, durability testing, chemical compliance testing, engine endurance, functional safety, and cybersecurity in the inspection segment. It guarantees better consumer protection through safer products and assists government authorities in improving efficiencies and maximizing market surveillance resources that are already limited. It also aids manufacturers in lowering internal compliance costs and navigating global market regulations more effectively. As a result, the inspection market is expected to increase steadily.

Third-party attestation of automotive products, processes, and systems is included in the certification. Some of the key certifications for customer safety in the automobile sector include IATF 16949, ISO (International Organization for Standardization) family, TISAX (Trusted Information Security Assessment Exchange), and EMAS (Eco-Management and Audit Scheme). The Consumer Product Safety Improvement Act (CPSIA) of 2008 in the U.S. mandates third-party testing and certification of certain products before they are introduced. Government-mandated certification could aid in the expansion of this market.

By Vehicle Type Analysis

Passenger Cars Segment to Hold Largest Automotive TIC Market Share

The market is segmented into passenger cars and commercial vehicles based on vehicle type.

The passenger cars sector currently has the biggest market share, which is expected to hold during the forecast period. The market for connectivity standards is developing with the growing demand for technologies, such as connected automobiles and other IoT applications, owing to escalating safety concerns and regulations. As a result, demand for these services is expected to rise. Also, to ensure consumer safety, blockchain can be used to implement end-to-end traceability systems for cab services. As a result, the passenger cars category now has a large market share and will continue to do so during the forecast period.

The commercial vehicles segment is expected to exhibit the highest CAGR during the projected period. This factor is due to TIC businesses supplying fleet operators with services on an order-by-order or daily basis. For example, smart sensors in products provide round-the-clock remote monitoring and inspection capabilities, which may be utilized for 24/7 safety & security inspections and predictive maintenance for commercial vehicles. Big Data and analytics will enable TIC organizations to deliver new services, such as predictive maintenance and data-based services in new sectors, in addition to providing superior insights for existing services.

REGIONAL INSIGHTS

Asia Pacific has the maximum market share, accounting for USD 7.45 billion in 2020. The growing demography of countries, such as China and India, which accounts for more than 38% of the world population is a crucial element driving the region's growth. This expansion is due to increased urbanization and greater disposable income, which resulted in changing consumer preferences. The automotive sector is expanding in South Korea, India, and China, owing to increased car production. In 2019, India produced 4.51 million automobiles, which were 3.62 million were cars. In addition, China was the world's top vehicle producer in 2019, producing 25.72 million vehicles, 21.36 million of them being cars. The automotive TIC market growth in the region is fueled by a strong automotive sector and rising number of car manufacturers. As a result, Asia Pacific is expected to lead the market during the forecast period.

Europe is expected to be the second-largest stakeholder, exhibiting the fastest growth during the forecast period. It can be attributed to the fact that most big TIC businesses have their headquarters in Europe and that the majority of their sales come from APAC and EU nations. According to a report published by the European Commission in 2018, around 178 vehicle facilities are present across the EU. During the projection period, the market is projected to be driven by continued development of vehicle-to-infrastructure and in-vehicle entertainment technologies. The presence of major car manufacturing businesses, such as Robert Bosch GmbH (Germany), Volkswagen AG (Germany), and Daimler AG (Germany), makes Europe a major hub for the automotive sector.

The automotive TIC market in North America accounted for the third-largest market. As far as major automotive TIC organizations are concerned, the U.S. is first in this region. The U.S. has dominated the light vehicle segment. The North America market is anticipated to grow significantly throughout the forecast period, owing to increased vehicle manufacturing in the U.S. New potential for this industry has risen due to rise in electric vehicles.

Furthermore, the government is a primary driver of a country's market expansion. For illustration, the U.S. Environmental Protection Agency (EPA) proposed technical changes to emissions testing protocols for the Fuel Economy Standards and Greenhouse Gas Emissions (GHG) Standards in 2020 to ensure a smooth transition from fuel blends with 0% ethanol to 10% ethanol. As a result of introducing such legislation and other requirements, TIC services have become essential for automobile companies in this region.

Latin America, the Middle East, and Africa make up the rest of the world. There are no strong laws in Africa, and there are no resources to alter them. On the other hand, the Middle East is expected to play a big role in the market expansion. This can be related to the region's socio-economic prosperity. As a result, automotive testing, inspection, and certification market in this region are anticipated to be in high demand.

KEY INDUSTRY PLAYERS 

Applus Services SA Focuses on Technological Developmental Acquisitions to Enhance Market Share

Applus+ is a global leader in testing, inspection, and certification. Its competent and skilled staff of over 23,000 people ensures operational excellence in over 70 countries across numerous sectors. Applus+ RTD, Applus+ K2, Applus+ Velosi, Kiefner and Associates, X-R-I Testing, and JAN X-Ray Services are some of Applus's well-known brands in the U.S.

In October 2021, Applus+ purchased Mipel, S.A.'s Instrumentation Area and Metrology Laboratory, and it will be merged into the Applus+ Laboratories business. The laboratory is equipped with high-performance equipment and facilities. Its employees are well-versed in serving industries that require meticulous control of measuring instruments such as automotive, aeronautics, pharmaceutical, government agencies, and hospitals. In May 2021, Applus+ purchased IMA Dresden, a testing laboratory with a solid reputation for excellence in materials and structural testing. Also, it is a leader in most of its core areas of European automotive, railway, aerospace & military, wind power, and medical devices markets.

LIST OF KEY COMPANIES PROFILED:

• TÜV SÜD (Munich, Germany)


• Applus Services, S.A (Madrid, Spain)


• Dekra SE (Stuttgart, Germany)


• SGS Group (Geneva, Switzerland)


• Bureau Veritas Group (Neuilly-sur-Seine, France)


• Intertek Group Plc (London, U.K.)


• Mistras Group (New Jersey, U.S.)


• Element Material Technology Ltd (London, U.K.)


• British Standards Institution (London, U.K.)


• DNV GL (Baerum, Norway)

KEY INDUSTRY DEVELOPMENTS:

• May 2021 – In Thiene, Italy, DEKRA purchased a CMC testing and certification laboratory. DEKRA is expanding its global network of laboratories for radio frequency (RF) testing and electromagnetic compatibility (EMC), emphasizing the automotive industry, wireless technologies, and medical devices.


• April 2021 - DEKRA announced its designation as an MFi Authorized Test Laboratory, allowing it to provide specific CarPlay certification testing and advising services to Apple's MFi licensees in the automotive, telecommunications, and infotainment system industries. Third-party hardware accessories that use Apple's MFi licensed platform connect digitally to over 1.5 billion active Apple devices globally and is are included in the MFi Program.

REPORT COVERAGE

The global market report provides detailed market analysis and focuses on crucial aspects such as leading companies, types, and leading product applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the market's growth over recent years.

Report Scope & Segmentation