FREEDONIA MARKET RESEARCH REPORT ANALYZES AUTOMOTIVE DIAGNOSTIC PRODUCTS

US demand for automotive diagnostic equipment, software, services and data will grow 5.9 percent per year to $1.3 billion in 2011. Despite the vehicle-quality-driven slowdown experienced in overall aftermarket parts and service sales in the US, diagnostic equipment demand should remain healthy for a number of reasons. Perhaps most importantly, demand for these products is driven by the expanding role played by electronic/electrical systems in automobiles -- these systems should comprise over 40 percent of vehicle value by 2016; up significantly from the 22 percent they represented in 2000. As a result, light vehicle electronic content and system sophistication levels continue to climb, opening new market space for more advanced diagnostic equipment. These and other trends are presented in Automotive Diagnostic Products, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

There have also been two ongoing shifts within the diagnostic equipment industry that will affect future market demand. The first involves the transition from highly expensive shop-owned “big box” devices toward technician-owned handheld systems. Today, rather than rely on the shop’s big box analyzer, more technicians are purchasing their own scanners and other electronic tools, which has supported demand for these tools. The other, and newer, trend involves the shift away from a primary focus on hardware to the rising influence of software. Some diagnostic equipment manufacturers see software becoming the dominant source of the value for the industry in the future, as hardware becomes more commodity-like in nature. In fact, the introduction of less-expensive PC/Windows-based operating systems opens the door to the total commoditization of hardware, with software becoming the most valuable part of the business. 

Two conflicting forces will continue to influence the automotive diagnostic equipment industry. First, vehicle systems themselves continue to increase their capabilities to take on more of the diagnostic challenge. Second, diagnostic equipment increasingly features intelligent systems that can lead technicians through diagnostic cycles. These trends are likely to continue, with the first to an extent reducing the need for intensive shop-level diagnostic procedures while the second offers new opportunities for companies to provide additional value to the repair industry.

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.