IDC expects the total automotive IT market size of $6.4 billion in 2004, to reach $7.66 billion by 2008.
Automotive players are gradually moving away from cost-cutting mentalities of the past towards creating a manufacturing environment for sustained innovation. This is causing a fundamental shift in the way automotive players view their businesses, and more importantly, IT. IDC expects that this shift in mentality will drive a focus on the implementation of strategic applications to gain competitive advantage, within both the OEM and parts and components companies.
IDC expects that overall automotive IT spending growth will be 1.2% in 2004, a value of $6.4 billion, and will show 4.4% compound annual growth rate (CAGR) over the forecast period. Hardware and IT services spending growth is expected to be negligible in 2004, recovering slightly in 2005, with IT spending growth being driven by software spending over the forecast period.
A sub-sector analysis highlights that:
IDC is expecting total IT spending for automotive OEMs to register 4.3% CAGR over the forecast period (2004 to 2008), with growth being driven by software spending. The value of the market is expected to reach $5.05 billion by 2008.
Total IT spending for automotive component and parts suppliers will show 4.6% CAGR over the forecast period, with total IT spending reaching $2.3 billion by 2008. A CAGR of 4.9% is expected for IT services for automotive suppliers over the forecast period.
"The business drivers of the automotive industry continue to force car manufacturers to examine certain functional business areas within their value chains," said Jennifer Thomson, program manager at IDC's European Vertical Markets. "Business transformation for information visibility to enable a customer-centric ETO environment will be a key driver for IT investments."
IDC's study Automotive IT Spending Forecast Update, Western Europe, 2004-2008 (Doc #AS54L, December 2004) provides an overview of IT spending trends and forecasts in the European automotive sector. Beginning with trends affecting IT demand in the industry, the study explores major drivers and directions in IT adoption. On the quantitative side, the focus is on spending in hardware, packaged software, and IT services for the major automotive sub-industries in Western Europe, between 2004 and 2008. Data for the following automotive sub-markets is provided: vehicles, bodies, trailers, and motorcycle manufacturers, and parts and accessories.