GLOBAL AUTOMOTIVE STEERING SYSTEM MARKET
As of Sep 2020, electric power steering and hydraulic power steering are most common in passenger car segment and Hydraulic /Electro hydraulic steering systems are most common in commercial vehicles.
Rack Type EPS needs higher motor output and handling performance than Column Type EPS and is fitted on mid and high segment vehicles.
EPS and cooperative control is also required for ADAS features like BSD (Blind Spot Detection), Parallel park assist. Therefore, for all steering system suppliers, their ADAS exposure is based completely on electric power steering.
In passenger vehicles, the transition from manual/hydraulic power steering to electronic power steering (EPS) is over and 98% of new platforms planned by all OEMs have EPS as standard.
More than 20 car manufacturers have committed to equip all new passenger cars by September 2022 with the low speed automatic emergency braking (AEB) technology.
Steer by wire-L2 automation (2X dollar content compared to conventional steering system) is expected to bring in the revenue growth for all suppliers in next 5 years, especially post 2022 when Euro NCAP 2025 starts approaching. Automatic emergency steering will be the biggest enabler of Steer by wire.
MARKET SIZE AND FORECAST
The global automotive steering system market is estimated at ~$22 Billion in 2020, growing at 7% CAGR till 2025. The average per unit price of steering systems is expected to remain stagnant, globally till 2022 when Euro NCAP trials begin.
Many OEMs have already asked for price cut from their respective steering system suppliers.
CHINA AUTOMOTIVE STEERING SYSTEM MARKET
China led Asia pacific market accounts for highest number of new product launches for steering system suppliers. Although, the decline in auto production forecast for 2019 and 2020 is unprecedented, it is still the biggest automotive market globally.
More than 15 OEMs have committed to launch 25 L2+ automated vehicles by 2022. It is an important opportunity for steering suppliers to offset the decline in revenues by supplying advanced steering systems required in these vehicles.
The decline of Chinese passenger car sales (~8% YOY) in 2019 and a reduced guidance for 2020 is major challenge to the global Automotive steering system market.
China Automotive Systems which is among the biggest supplier of steering systems to domestic brands in China signed an exclusive contract with Great Wall Motor for its low cost EV ORA R1 in H1 2019.It also supplies EPS to domestic as well as foreign origin OEMs.
INDIA AUTOMOTIVE STEERING SYSTEM MARKET
The brush column steering system market (Torque assist <60Nm) has been on a decline mode in India due to volume erosion in lower segment vehicles. On, the contrary, the brushless column assist EPS has been growing at higher single digits for past 4 years despite slowdown in overall industry volumes.
Among recent launches, only Tata Harrier (launched in Jan 2019) has a hydraulic power steering, rest all vehicles have electronic power steering system.
Mando India provides steering system for all major Hyundai platforms in India, notably the high margin Creta and high volume i10 and i20 platforms. Mando is also benefitting from the continued growth of KIA in India has the company crossed 100,000 unit milestone in about 12 months with just one global product in its line-up.
EUROPE AUTOMOTIVE STEERING SYSTEM MARKET
Europe passenger car sales were up by 1% in 2019(YOY) and the volume is expected to decline by ~18-20% in 2020.Europe is among the most important market for steering suppliers as it has the highest penetration of steer by wire, globally.
The recently concluded merger between PSA and FCA could be a great opportunity for existing suppliers of either groups to consolidate their volumes and improve their bottom line.
US AUTOMOTIVE STEERING SYSTEM MARKET
In US, total passenger car sales were 17.1 Million units but we expect volume erosion of 2-2.5 M units in 2020 on the back of slowdown caused due to COVID.
US is the biggest market for rack assisted power steering system due to 16% share (2.6M units in 2019) in new car sales for pickup trucks.
RAM pickups outgrew the market and grew by 18% YOY in 2019, FCA sources steering from Non-American vendor for both Dodge and Jeep brands for various models. This is in sharp contrast to GM and Ford who have traditionally relied on American suppliers for steering sourcing.
COVID IMPACT ON GLOBAL AUTOMOTIVE STEERING SYSTEM MARKET
The automotive industry has been adversely impacted across every region globally as almost all governments implemented nonessential business restrictions to control the pandemic, resulting in production as well as dealership shutdowns during a significant part of H1-2020
The global automotive production peaked in 2017 and has been in decline mode ever since. COVID is expected to shrink 2020 auto production by as much as 22% and Pre-COVID levels are only expected to resume by 2023-2024.
Many OEMs have shelved/postponed plans to launch L4 and L5 autonomous vehicles which will have direct impact on future prospects of highly automated steering systems.
For steering suppliers, while all manufacturing facilities have resumed production with gradual recovery from the April lows, but it had a significant negative impact on H1-2020 financial results. Given the continued market uncertainty, in both near term as well as medium term many suppliers have refused to give guidance for full year 2020 unless situation stabilizes further.
The silver lining however lies in the fact that OEMs remain committed to electrification, and advanced safety features related to ADAS Levels 2 and 3 which will have more dollar content from steering suppliers.
Nexteer’s high-output rack EPS could find more takers in the heavy truck market due to continued interest in electric trucks which was until very recently reserved for light duty trucks.
The global automotive steering system market is highly concentrated among less than 10 vendors. There is an intense cost competition among suppliers in lower and mid-segment vehicles as the technology value add is minimal. The gross margins on EPS products are lowest among all steering types as many tier-1 suppliers are dependent on other suppliers for sub-component sourcing.
In China, suppliers are facing two major problems, 1) There is an intense price war (not sustainable in the long run) among suppliers and 2) OEMs are putting up ambitious sales targets which are of-course followed by multiple downward revisions throughout the year.In these circumstances it will be very difficult for any supplier to improve their revenues and gross margin.
Excellent negotiation skills and recurring revenue from existing platforms and OEMs are key pillars of suppliers` overall business strategy.
JTEKT and Nexteer are specialist steering suppliers who also have an adjacent drive-line business.
Japan headquartered JTEKT generates ~$6-$7 Billion per annum from its steering system business and is a preferred supplier to many Japanese OEMs. It had more than 25% share of global automotive steering system market in 2019.
ZF, Bosch and Nexteer are market leaders in commercial vehicle segment.
Nexteer is the market leader in North America and GM North America is its biggest customer (derives ~30% of its global revenues), followed by other OEMs.
China based China Automotive Systems (annual gross margin~14%) entered in a joint venture with Hyoseong Electric Company to produce small electric motors(3 million units’ annual production) for use in EPS systems. As ADAS integrated steering volumes increase in coming years, we expect many more suppliers to take a similar approach to get a better grip on the overall quality and cost control.
South Korea headquartered Mando Corporation is a leading supplier to Hyundai-KIA group and derived ~30% of its annual global sales from Steering system. It started manufacturing EPS in 2004 which first debuted on Hyundai`s Verna and now supplies to al major OEMs including GM, Nissan, Renault etc.
NEW PRODUCTS DEVELOPED IN AUTOMOTIVE STEERING MARKET
2021 DODGE CHARGER– The electric power steering can be calibrated to optimize steering effort for a variety of driving situations via settings in the SRT Performance Pages
2021 MERCEDES E CLASS- The steering wheel has a comprehensively digitalized steering called “the capacitive steering wheel”. The rim contains a two-zone sensor mat which detects whether the driver’s hands are gripping the steering wheel. The 2016 E-Class was the first car ever to feature Touch Control buttons on the steering wheel allowing complete infotainment system to be controlled by steering
2018 AUDI A8– The optional, new dynamic all-wheel steering combined direct, sporty steering and stability. The steering ratio for the front wheels varied as a function of speed; with the rear wheels turning in or against the direction of steering depending on the speed range. The dynamic steering was made possible by inclusion of strain wave gearing.
2018 ZF`s DUAL PINION STEERING- In Sep 2018, ZF secured contracts to supply dual pinion steering systems to three domestic Chinese car OEMs. The technology was based on a steering rack carrying two sets of teeth. Every set of rack teeth is driven by a separate pinion and diver`s input torque is transmitted to the rack via a “steering pinion” and the assistance torque is transmitted via a “drive pinion”.
2018 HYUNDAI MOBIS`S DUAL MODE ELECTRONIC STEERING SYSTEM- The company developed an electric power steering system which uses two electronic circuits during autonomous driving to maintain normal steering capabilities. Hyundai Mobis also succeeded in reducing the size of the electronic control unit (ECU), by using small electronic devices to reduce its size in half without any decline in productivity
2017 TOYODA GOSEI`S STEERING WHEEL WITH A GRIP SENSOR- Toyoda Gosei jointly developed the new steering wheel with Toyota. This steering wheel can detect whether the driver is gripping the steering wheel, for 2018 Lexus LS.
GROWTH IN STEER BY WIRE
In 2017, Nexteer expanded its automated steering portfolio with addition of two all new products i.e Steering on Demand and Quiet Wheel Steering.
Steering on demand: Steering on Demand for transition between driver and automated driving control. The system also enables the driver to choose between various driving performance options including sport, comfort and manual override modes.
Quiet wheel steering: Quiet Wheel Steering modifies the steering wheel rotation during an automated directional change reducing the potential hazards of a fast rotating steering wheel and improving driver’s safety and sense of security.
Also, in 2017, WABCO developed an active steering technology to improve the comfort and safety of commercial vehicles called OnLaneAssist. The system works by taking inputs from a forward-looking camera to detect lane markings and evaluate the vehicle’s position relative to the lanes also allowing, active lane correction.
The new product was based on R.H. Sheppard`s steering technology intended for heavy- and medium-duty trucks and buses applications only.
THE SUCCESS OFF ZF`S ACTIVE KINEMATICS CONTROL (AKC) REAR AXLE STEERING SYSTEM
At low speeds, AKC steers opposite to the front wheels’ steering angle generating a higher yaw rate for the vehicle to reduce the turning radius by up to 10%. At higher speeds, 40mph (60km/h) and above, during quick obstacle-avoidance manoeuvres, the system steers the rear wheels in the same direction as the front wheels. This improves the overall driving dynamics and directional stability of the vehicle.
By the end of 2017, seven premium vehicle manufacturers had implemented AKC in volume production due to benefits just after four years since the product was launched. Some of the high-volume platforms were Audi Q7, Cadillac CT6 and the BMW 7 Series.
M&A IN AUTOMOTIVE STEERING MARKET
The passenger vehicle space has been relatively insulated for M&As but the commercial vehicle market has seen to important acquisitions.
In the commercial vehicle segment, Knorr-Bremse acquired the commercial vehicle integral power steering business (IPS) from Hitachi Automotive Systems in Japan and Thailand in late 2018. Hitachi`s IPS division was the leading supplier of hydraulic power steering parts for commercial vehicles in Japan, catering from pickup to heavy duty trucks.
Knorr-Bremse continued its acquisition spree in 2020 and acquired another German Commercial vehicle steering supplier for $149.5M in Jan 2020 from WABCO.
- ZF Friedrichshafen AG
- Global Steering Systems LLC
- JTEKT Corporation
- RH Sheppard
- Mando Corporation
- Hyundai Mobis
- Hitachi Automotive Systems
- China Automotive Systems, Inc
|2||Scope of the report|
|7||Insights from Industry stakeholders|
|8||Cost breakdown of Product by sub-components and average profit margin|
|9||Disruptive innovation in the Industry|
|10||Technology trends in the Industry|
|11||Consumer trends in the industry|
|12||Recent Production Milestones|
|13||Component Manufacturing in US, EU and China|
|14||COVID-19 impact on overall market|
|15||COVID-19 impact on Production of components|
|16||COVID-19 impact on Point of sale|
|17||Market Segmentation, Dynamics and Forecast by Geography, 2020-2025|
|18||Market Segmentation, Dynamics and Forecast by Product Type, 2020-2025|
|19||Market Segmentation, Dynamics and Forecast by Application, 2020-2025|
|20||Market Segmentation, Dynamics and Forecast by End use, 2020-2025|
|21||Product installation rate by OEM, 2020|
|22||Incline/Decline in Average B-2-B selling price in past 5 years|
|23||Competition from substitute products|
|24||Gross margin and average profitability of suppliers|
|25||New product development in past 12 months|
|26||M&A in past 12 months|
|27||Growth strategy of leading players|
|28||Market share of vendors, 2020|
|30||Unmet needs and opportunity for new suppliers|