Northbrook, IL -- (SBWIRE) -- 01/29/2020 -- The Automotive Diagnostic Scan Tools Market is estimated to be USD 38.9 billion in 2019 and is projected to reach USD 57.4 billion by 2027, at a CAGR of 5.0% from 2019 to 2027. The key growth drivers for the market are the rise in vehicle production and sales, increase in automotive workshops, and the trend of integrating advanced features in the vehicles.

Market Dynamics

Increase in vehicle sales

Economic growth has led to a gradual change in the overall lifestyle of the consumers. The change in the economy is noticeable, especially in developing countries such as China, India, and Brazil. The increased sales of passenger cars globally, especially premium passenger cars, is indicative of the improved lifestyle and financial status. As more and more families have moved to a higher economic status, their demands and preferences have changed. This has positively impacted the sales of premium cars across the globe. According to Statista, 81.6 million units of passenger cars are expected to be sold in 2018. The global sales of passenger cars have risen by 11.01% from 2014 to 2017. This growth can be attributed to factors such as strengthening economy of emerging markets such as India, China, Brazil, and Mexico.

Along with economic growth, there is an intense competition among vehicle manufacturers to capture a large consumer base across all regions. This makes automakers encourage potential customers to purchase vehicles and boost the profitability. Thus, the rise in the vehicle production globally contributes to the growth of the automotive diagnostic scan tools market.

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High cost of advanced technology equipment

Diagnostic scan tool equipment has witnessed a decline in their overall price levels. However, the newer technologies are more expensive compared to the conventional OBD-I systems. This can slow the adoption of new technologies. The demand for innovative products may also suffer. Diagnostic scan tool manufacturers are under constant pressure from OEMs to curtail the prices of diagnostic scan tool equipment. Such a scenario may deter the diagnostic scan tool manufacturers to invest in R&D activities. It can be noticed in the developing countries, where OEMs are still launching new models that come with basic diagnostic scanning systems.

Moreover, since the automobile must successfully meet stringent safety regulations, automotive diagnosis requires highly sophisticated instruments and equipment, which add to the overall cost of the diagnosis equipment. The equipment also needs to be updated whenever there are changes in the regulations.

The global demand for eco-friendly vehicles is on the rise. The diagnosis of hybrid vehicles with electric powertrains requires technologically advanced equipment such as mobile-based scan tools and others. Minor handheld tools are not an appropriate or adequate choice for testing eco-friendly vehicles. Advanced equipment is more expensive than conventional diagnosis equipment. The addition of complex diagnosis technology increases the overall cost of automotive diagnostic scan tools equipment.

Collaboration of OEMs with OBD suppliers

The major auto industry players prefer to go through the partnership with diagnostic scan tools suppliers, in order to generate more revenue from the market. The industries or production facilities that are established in this global market are endowed with favorable economic conditions, lenient regulations, cheaper raw materials, lenient import–export scenario, and more. Hence, this collaboration proved to be profitable for both the entities of the automotive ecosystem. For instance, Daimler Chrysler, in collaboration with Vector Informatik GmbH, has focused on expanding their business including the diagnostic scan tools array. The principal agenda for understanding such joint ventures is to ease up the convenient use of scan tools and equipment. CANdela (CAN Diagnostic environment for lean application), by Vector provides a series of product line to integrate the OEM-specific expert formats for diagnosis. CANdela approach enables the user to process and acquire data of ECUs for diagnosis functionalities. Daimler–Chrysler has Diogenes, the company-specific description data-format that automatically generates and processes uniform diagnosis. OEMs such as OPEL, GM, and agricultural equipment manufacturer CLAAS are the esteemed participants of the CANdela approach. Moreover, Vector Informatik GmbH is heading for the joint venture policy with top-notch OEMs such as Fiat, Ford, and many more. Previously, the two big-shot companies of this industry, Daimler and Volkswagen, had jointly decided upon developing and executing new transporter generation "Spinter" and "Crafter," under the project named "Phoenix." Thus, joining forces of different entities of the automotive ecosystem has provided an opportunity to the automotive diagnostic scan tools market.

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By Vehicle: Passenger car segment is expected to be the largest segment in the automotive diagnostics scan tools market

The passenger car segment is estimated to hold the largest market share during the forecast period. The increasing sales of passenger cars globally is responsible for the exponential growth of the automotive diagnostic scan tools market. Also, the growing stringency of mandates related to emissions and vehicle safety performance in several countries is inflating the demand for automotive diagnostic scan tools.

By Workshop equipment: Exhaust gas analyzer segment is expected to dominate the automotive diagnostics scan tools market

The exhaust gas analyzer is projected to register the fastest growth, in terms of value and volume, in the automotive diagnostic scan tools market during the forecast period. The growth of the exhaust gas analyzer segment can be attributed to the increasing implementation of stringent emission norms in several countries.

By EV Type: HEV segment is estimated to be the largest market during the forecast period

By EV type, the HEV segment is estimated to be the largest segment of the automotive diagnostic scan tools market, by value, during the forecast period. Rising adoption of HEVs by consumers due to high power generation and fuel efficiency is the principal factor driving the growth of this segment in the diagnostic scan tools market.

By Propulsion: ICE vehicle segment is anticipated to register largest growth in the coming years in automotive diagnostic scan tools market

By propulsion, ICE vehicles segment is estimated to be the largest segment of the automotive diagnostic scan tools market during the forecast period. The growth of this segment can be attributed to the high vehicle parc and the rising demand for premium vehicles. However, the electric vehicles (EVs) segment is projected to grow at the highest CAGR during the forecast period. It is expected to remain an attractive market in the near future due to the increase in demand for EVs.

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