The automotive industry is suffering particularly badly in the current economic downturn. Vehicles are one of the most substantial purchases that consumers make. As consumers tighten their belts, many defer this purchase. Even those consumers who are willing to purchase are finding it tough to access credit. Sales of new vehicles have therefore fallen heavily and this is having a knock-on effect on suppliers of automotive electronics. According to IMS Research though, it will hit demand for some systems harder than others.

Demand for many optional extras seems to be falling particularly sharply. Indications are that those few customers buying new vehicles are often buying them with less kit. Electric seats, navigation systems and head-up displays are just some systems that tend to be offered as options.

Consumers also appear to be downsizing to vehicles with smaller engines, which tend to feature a lower value of engine electronics than those with larger engines. However, on the flip side, electric power steering is one system that does tend to be fitted to vehicles with smaller engines. Demand for this system should therefore stay comparatively high.

One trend that isn’t going to go away is the move towards greener vehicles. According to Automotive Research Director, Jon Cropley, “Upcoming legislation is forcing manufacturers to keep focused on making vehicles that use less fuel and have lower emissions. In the short term, this will mean more vehicles with features that make the engine more frugal, like stop/start, direct injection and turbochargers. In the longer term, this will mean that plug-in hybrid vehicles and electric vehicles become common.” IMS Research forecasts that over 1 million plug-in hybrid vehicles and electric vehicles will be produced in 2016.