EU27 and Russian Automotive Contract Manufacturing Market 2022-2028

EU27 and Russian Automotive Contract Manufacturing Market 2022-2028

European Union (EU 27) and Russian contract assembly for passenger cars market is estimated to grow at a CAGR of 2.5% during the forecast period (2022-2028). The market was valued at nearly $7.4 billion in 2021, which is expected to reach nearly $8.0 billion in 2028. Passenger cars involve the use of more complex components than any other vehicle type, which leads to the demand for contract assembly services for passenger cars. Increasing demand for passenger cars has boosted the adoption of contract assembly services in Europe. In December 2021, the EU passenger car demand was increased by 21.7% owing to the surge in the car sales in France (21.7%) and Sweden (109.3%), as per the European Automobile Manufacturers Association (ACEA). In 2021, the new passenger car registrations were increased by 1.2% across the EU. Outsourcing the assembly for the automakers can be beneficial on low-volume models to minimize capital expenditures and avoid tying up their own production lines. This results in creating significant demand for contract assembly services for passenger cars in the region.

The market is segmented based on the vehicle assembly line and its classification which includes single model and mixed model. In the single model assembly line, only one model can be assembled in the assembly line, whereas, in the mixed-model assembly line, more than one model can be assembled in the same assembly line. Hence, the development from a single model to mixed-model assembly has been witnessed, owing to the increasing need for flexibility in vehicle assembly. The mixed-model assembly provides the ability to assemble a range of products that share similar materials, similar processes, and similar services, on the same production line, with high quality, high productivity, and high flexibility. Therefore, the market for a mixed assembly line is expected to grow at the highest CAGR of 3.0% during the forecast period.

Geographically, the market is segmented into EU 27 and Russia. The EU countries include Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. Germany, France, Italy, Spain and the Netherlands are considered among the top players in the EU 27 and Russian contract assembly for the passenger cars market.

Major market players in the EU 27 and Russian contract assembly for passenger cars market include Magna International, ZF Friedrichshafen AG, and Valmet Automotive, Inc. In order to sustain in the competitive market, these players adopt various strategies such as mergers and acquisitions, expansions, joint ventures, and product development, among others. For instance, in July 2021, the Valmet Automotive developed an additional line in the general assembly at the Uusikaupunki, Finland car plant, which is intended to accelerate the production and enhance flexibility. The new line offers an additional station in the early stage of the general assembly. Over the years, Valmet Automotive has continuously leverage production volumes at the Uusikaupunki car plant. In 2021, Valmet Automotive delivered over 100,000 vehicles for the first time in its history. Owing to the rapid growth of production volumes, the company’s facilities and processes at this plant are under continuous development. The changes in the general assembly are much larger compared to the previous year. Developing an additional line is a response to both the current and future production requirements, with a focus on increased flexibility. The expansion shows that the company is continuously preparing for future challenges. The additional assembly line represents the company’s manufacturing services for larger manufacturing flexibility to improve competitiveness and its ability to respond to customer needs. The expansion of the assembly line represents the emerging demand for contract assembly services for vehicles in Europe, which in turn, will contribute to the growth of the market.