In recent months the economic outlook has deteriorated rapidly and the automotive industry has suffered badly, particularly in the United States. The tight credit environment is clearly hurting car dealers and vehicle manufacturers, but what about the rest of the automotive industry?  

There are several negative factors, which combined have hit the industry hard this year. In addition to the global economic downturn, there were high fuel prices and high raw material prices in the first half of the year. In addition, companies are coming under greater pressure from impatient investors, shareholders and banks. However, the most immediate and potentially most damaging threat is the scarcity of credit. This is hitting consumers badly - many of whom are willing to buy a car but now find they cannot get finance - as well as the automotive suppliers who are heavily leveraged.  

The consequences are evident throughout the industry, with vehicle manufacturers cutting down on shifts, suppliers revising their earnings expectations, and auto dealers slashing prices. The stress is even greater on the smaller Tier Two and Tier Three suppliers who make parts for the Tier One companies. Many will undoubtedly go out of business or be consolidated.

Some suppliers will ride out the storm better than others. Despite declining forecasts for vehicle production and sales there are several electronic systems that are likely to see continued increasing demand. "We are not only talking about electronic stability control, which will see a significant increase in fitment rate due to legislation," commented Helena Perslow of IMS Research, "but also electric power steering and adaptive headlights, to name just two other systems".

Demand for driver assistance systems like lane departure warning (LDW) and self parking is also likely to continue increasing. IMS Research's latest report, "OEM Automotive Electronics - The World Market for Systems and Semiconductors 2008 Edition", forecasts that the fitment of self parking systems in new vehicles will increase from the current 125,000 per year to over 2.4 million in 2016. Valeo on its own, for example, has another 9 vehicle models to equip before the end of 2010.