The North American automotive contract manufacturing market is growing at a considerable CAGR of 5.8% during the forecast period (2021-2027). Automotive contract manufacturing companies intend to provide various services to OEMs (Original Equipment Manufacturer). The major factors that are augmenting the growth of the market include an increase in automotive sales in the North American region, availability of skilled laborers, and availability of high-end technology for research and manufacturing. In North America, the US is estimated to be the significant market in automotive contract manufacturing in terms of revenue and more than 260 vehicles populate the US road. With the US being the world’s second large producer of vehicles and the introduction of new types of vehicles will also lead to an increase in the interest of people for buying which will lead to growth in market share of the automotive contract manufacturing. 

However, outsourcing risks that arise due to integrating issues between OEMs and contract manufacturers, and skilled workforce availability at high cost are some of the constraints that challenge the growth of the market in the North American region. Conversely, technological advancements in hybrid vehicles, electric vehicles, and self-driving vehicles are estimated as an opportunity for the market players. For instance, according to the reports of IEA (International Energy Agency), in 2019, United States was estimated as the world’s third-largest market in producing electric cars accounting for 326,000. Moreover, in 2019, the sales of electric vehicle sales in Canada saw an increase of around 43% over the previous year. In addition to this, According to NITI Aayog, In India, 70% of all commercial cars, 30% of private cars, 40% of busses, and 80% of two and three-wheeler vehicles are estimated to be electric by 2030.

Impact of COVID-19 on the North America Automotive Contract Manufacturing Market

The North American automotive contract manufacturing market is hardly hit by the COVID-19 pandemic since December 2019. The outbreak of COVID-19 in the major economies has disrupted the manufacturing and supply of automotive manufacturing across the North American region which resulted in the decrease of market share. This was mainly due to the lockdowns imposed by the governments of several countries due to which many industries were not being operated. Moreover, lack of workforce availability, logistics also hindered the growth of the market. According to the International Organization of Motor Vehicle Manufacturers (OICA), in 2019, there were 16.8 million motor vehicles manufactured in North America and in 2020, 13.3 million motor vehicles were manufactured showing a decline of 20.5%. 

Segmental Outlook 

The North American automotive contract manufacturing market is segmented based on services and vehicle types. Based on the services segment, the market is segmented into design and development, vehicle assembly, automotive electronics, and component manufacturing. Further, based on the vehicle type segment, the market is segmented into two-wheelers, passenger cars, commercial vehicles, construction, and agricultural vehicle. The passenger cars segment had significant shares in the vehicle type segment. The market share of passenger vehicles is estimated to grow in the forecast period owing to technological advancement and the introduction of a new type of vehicle.

North America Automotive Contract Manufacturing Market Share by Vehicle Type, 2020 (%)

Passenger Cars Segment to Hold a Lucrative Share in the North America Automotive Contract Manufacturing market

Amongst the vehicle type segment of the North American automotive contract manufacturing market, the passenger car segment is projected to grow at a substantial rate over the forecast period. The major factor driving the market's growth is the annual increase in car sales. According to IEA projections, 17 million cars were sold in the US in 2019. Many contract manufacturers are now cooperating with these firms to boost their efficiency and sales on a global scale. According to the reports of the International Organization of Motor Vehicle Manufacturers, in 2019, there were 4.3 million passenger vehicles manufactured in North America. However, the manufacturing of passenger vehicles dropped down to 3.2 million by the end of 2020 due to the COVID-19 pandemic. Moreover, light commercial vehicles also had a significant contribution as in 2019, 11.8 million light commercial vehicles were launched across North America. 

Regional Outlooks

The North American automotive contract manufacturing market is analyzed based on the geographical regions that are contributing significantly towards the growth of the market. Based on the geography, the market is segmented into the US, Mexico, and Canada. The US is estimated to have one of the largest shares in the market. The presence of the majority of automotive contract manufacturers, availability of skilled workforce, and high majority sales of the vehicles in the country are some of the factors that fuel the growth of the market in the US. Mexico is estimated to be one of the fastest-growing countries owing to the high population base adopting automotive vehicles. 

Market Player Outlook

Key players of the North American automotive contract manufacturing market include Lear Corp., PDF, Inc., Faurecia SA, Stoneridge, Inc., NHK Spring Precision of America, Inc., Circle Gear & Machine Company Inc., and HM Manufacturing Inc., among others. These key manufacturers are adopting various strategies such as new product launches and approvals, mergers and acquisitions, partnerships and collaborations, and many others to thrive in a competitive environment. For instance, in April 2019, Lear Corp. acquired Xevo Inc. The acquisition was done to enhance Lear's capabilities in software, services, and data analytics and has strengthened its market position in connectivity.

The Report Covers

• Market value data analysis of 2020 and forecast to 2027.
• Annualized market revenues ($ million) for each market segment.
• Country-wise analysis of major geographical regions.
• Key companies operating in the North American automotive contract manufacturing market based on the availability of data, information related to new product launches, and relevant news is also available in the report.
• Analysis of business strategies by identifying the key market segments positioned for strong growth in the future.
• Analysis of market-entry and market expansion strategies.
• Competitive strategies by identifying ‘who-stands-where in the market.