Germany Testing, Inspection, and Certification Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

Germany Testing, Inspection, and Certification Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The Germany testing, inspection, and certification market is expected to register a CAGR of 5.7% over the forecast period.

Key Highlights

• The advent of stringent environmental norms and increasing health safety measures play a significant role in ensuring that the infrastructure, services, and products meet the standards and regulations in Germany. With the trend of testing and inspection across industries at regular intervals, such as oil and gas, becoming a mandate, testing, inspection, and certification services are further expected to grow in demand, irrespective of the industrial seasonality.
• Additionally, Germany is significantly the largest economy in Europe. According to the Federal Statistical Office of Germany, in the third quarter of 2022, Germany's GDP increased compared to the previous quarter at USD 1.03 trillion.
• Testing, inspection, and certification are services ranging from auditing and inspection to testing, verification, quality assurance, and certification of the product, equipment, and more. Companies are investing in these to increase production efficiency to reduce error by minimizing risk. Further, in January 2022, CSA Group built a new European headquarters in Plattling in Bavaria, Germany. As part of this project, CSA Group is considerably expanding its testing capabilities for German and European customers.
• Moreover, Germany is also a preferred location for producing complex electronic components. The electrical and electronic companies located in Germany have over 100 thousand diverse products, including automation systems, household appliances, electronic medical equipment, and others. This represents the high growth of the company's electronics sector, which is again one of the fastest-growing sectors. Significant enterprises in the country are further anticipated to influence the TIC market during the forecast period.
• Also, in October 2022, Buehler ITW Test & Measurement GmbH announced the opening of its new laboratory in Leinfelden-Echterdingen, Germany. The company also hosted an open week, May 2–6, 2022, to demonstrate the potential for solving specific quality assurance and materials science tasks. Such initiatives may further drive the studied market growth.
• Besides, the government has targeted for 55% emissions cut in the oil and gas and automotive sector by 2030, and it is planning to introduce carbon pricing for building and transport sector emissions in 2021.​ With the advancement in the manufacturing sector in Germany with Industry 4.0 and concepts like the Industrial Internet of Things (IIoT), the testing, inspection, and certification service providers have a massive opportunity to expand their business during the forecast period.
• Moreover, Germany's power sector is one of the primary sources of demand for non-destructive testing (NDT) after the oil and gas sector. The bulk share in power generation is held by fossil fuels, which is approximately 55% of the total energy generated in the country. In comparison, the renewables share stood at 25% of the entire electricity generation. In the future, the country will only depend on renewable energy, which has to provide 80% of the power by 2040. This has raised several environmental concerns in Germany, similar to several other European countries. This has also resulted in several stringent regulations in Germany regarding the environmental pollution caused by burning fossil fuels for power generation, positively impacting the market's growth. The country will shut down all its coal-fired plants by 2038.
• The COVID-19 pandemic initially led to a slight decline in the demand for testing, inspection, and certification services as the industries faced major production halts. However, a few prominent players witnessed significantly high demand for testing, inspection, and certification services from selected end-user sectors. Amid the coronavirus outbreak, multiple vendors reported, including health and safety disinfection monitoring and approval. Furthermore, as smart manufacturing initiatives in the country are on the rise. Manufacturers constantly lookout to transform businesses and achieve significant value by leveraging the Industrial Internet of Things, cloud, and analytics solutions may raise the studied market in the forecast period.

Germany Testing, Inspection, & Certification Market Trends

Increasing Investment in Automotive and Transportation Driving the Market Growth

• The growing automotive production and trends like electric vehicles and autonomous cars are expected to fuel the adoption and demand for TIC services in Germany over the forecast period. Further, the German government's goal to put six million electric vehicles on the road by 2030 is creating additional demand from the automotive sector.
• Further, the international expert organization DEKRA is setting up a new testing center for automotive and stationary batteries. The facility will be located at the company's Technology Center at DEKRA Lausitzring in Brandenburg, Germany. The new laboratory, for which the company is investing in the double-digit million euro range, is scheduled to be fully operational by late 2024.
• The country has witnessed extensive investments geared toward the growth of transport infrastructure. As the paying capacities of the working class rise, increased demand for better public transport options is influencing the initiation of development and renovation-oriented projects in the public sector. Further, in October 2022, Siemens launched the 'safe. trAIn' research project with 16 partners to support advances in driverless operations for regional trains in Germany. The USD 24.69 million artificial intelligence (AI)-based project, funded by the German government, will run until the end of 2024. Such investments in the country may further drive the studied market.
• The growing automotive production and trends, like electric vehicles and autonomous cars, across the German economy are expected to fuel the adoption and demand for TIC services over the forecast period. In January 2022, TÜV Rheinland opened Europe's state-of-the-art independent test center for electrical automobile drive batteries at the Aachen. The laboratory is one of the largest of its kind, and the investment volume amounts to over USD 26.033 million. The unique laboratory center is designed for testing vehicle batteries weighing up to 300 and 600 kilograms.

Manufacturing Sector is Expected to Witness Significant Growth

• With the advancement in the manufacturing sector in Germany with Industry 4.0 and concepts like the Industrial Internet of Things (IIoT), the TIC service providers have a massive opportunity to expand their business over the forecast period.
• Furthermore, according to the Ministry of Affairs, Germany has a strong interest and history in industrial IoT, having made constant industrial investments and innovations in the past decades. It is, therefore, Germany that is a pioneer in utilizing 5G to increase the use of industrial IoT further.
• Recently, German carrier Deutsche Telekom declared over 87% of German households could access its 5G network. Such instances are expected to positively impact the manufacturing and industrial goods industry's testing, inspection, and certification sector.
• Industry 4.0 trends in manufacturing environments and the industrial sector is one of the significant implementers in Germany. The stringent government regulation regarding manufacturing and industrial sector safety and the increasing adoption of automation technologies are mainly driving the adoption of TIC services in the sector. Furthermore, the rising deployment of robots and trends like Smart Factory is further creating a growth opportunity for the studied market vendors.​
• For instance, Bayer, the German pharmaceutical giant, intends to invest USD 2.2 billion over the next three years to enhance its manufacturing and supply chain capacities as it expands into cell and gene therapies. The organization further announced that it would be investing heavily in artificial intelligence (AI), data science, and multichannel marketing, further driving the studied market growth.
• On the testing, inspection, and certification services front, multiple vendor developments are recorded, such as in July 2021, SGS, via investment in mobile testing equipment, which extended the capabilities of Electrical & Electronics (EE) regulatory compliance testing services. These are expected to include the new requirements for semiconductor manufacturing plants and site surveys for product safety certification. Likewise, UL, a global safety provider, announced a collaboration with Arm, a semiconductor design and silicon intellectual property development and licensing company. This partnership helps address semiconductor functional safety.
• Moreover, additive manufacturing (AM) or 3D printing is gaining traction in the region due to an increased demand for freedom of design. According to the Verband Deutscher Maschinen- und Anlagenbau (Machinery and Equipment Manufacturers Association) (VDMA)), recently, the market value for 3D printing in Germany crossed USD 21 billion. As per the latest YouGov poll, products made in Germany have the best reputation among international consumers. ​
• Tesla is also planning to build its first European factory and design center near Berlin so that it can boast of the "Made in Germany" label. Such instances represent the growing need for, as well as the popularity of, certification services.

Germany Testing, Inspection, & Certification Industry Overview

The German testing, inspection, and certification market is moderately fragmented and consists of significant players. However, in terms of market share, notable players in the country, such as TÜV SÜD Limited, dominate the market. Multiple startups and incumbent TIC companies with a digital focus are posing fierce competition with traditional TIC companies. Existing TIC companies are making mergers and collaboration activities a part of their core strategy over the forecast period.

In November 2022, TÜV Rheinland introduced a worldwide exclusive test standard (2 PfG 2796/02.22) to certify building-integrated photovoltaic modules. This opens the door for the evaluations and certifications necessary before building-integrated photovoltaic (BIPV) systems can be used and the setup for building authority permission.

In July 2022, SGS Group announced the acquisition of Proderm GmbH in Germany, a leading provider of advanced clinical testing solutions for cosmetics, personal care, and medical products.

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