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Frost & Sullivan: Europe Lagging Behind Regarding Standard ESC Fitment in Cars

-- Responsibility lies with dealers as well as OEMs to ensure technology uptake, which provides a solution to reach a zero-fatalities target in road traffic

LONDON, Feb. 18, 2014 /PRNewswire/ -- Electronic Stability Control (ESC) is the most dominant enabler for active and passive safety technologies. Built into a car, it is crucial to avoiding crashes caused by losing control over the vehicle. But while the technology has achieved near complete penetration in North America, Europe still lags behind, which is mainly due to the lack of legislations mandating the technology in the region. Despite the European New Car Assessment Programme (EuroNCAP) which includes tests to rate cars fitted with ESC from 2011, the technology has witnessed only minimal growth over the last two years.

According to Frost & Sullivan, the European ESC market is expected to reach a market value of close to €2 billion by 2020. Among the various original equipment manufacturers (OEMs), it is the upper tiers in the pyramid that attract maximum fitment rates, with the German Big Three claiming close to 100 percent fitment across the eight segments they cater to.

"The mass market segments, though, work differently," says Frost & Sullivan (www.automotive.frost.com) Industry Analyst, Arunprasad Nandakumar. "Across Europe, different OEMs have established varied strategies for marketing ESC for their portfolios. While the optional fitment costs the consumer anywhere between 300 to 1200 Euros, the average optional fitment rate is approximately 540 Euros across Europe. If the technology does become mandatory in 2014, it will pose a challenge to volume manufacturers. They will either have to bear the cost of the technology or pass it on to the end consumer."

While mass market OEMs, such as Volkswagen and Toyota, follow a similar strategy by providing the technology as standard in 60-70 percent and as optional in the rest of their models, a few others, such as Fiat and Hyundai, have decided to offer the technology not even as optional on over three percent of their entire product range.

Regarding rate diversity, Nissan and Renault, despite their existing alliance, serve another interesting case in point. While Renault incorporates the technology on a standard base of at least 80 percent of its line-up, Nissan only reaches 60 percent. But Renault sells about 1.6 times the volumes compared to Nissan in Europe, and the Japanese manufacturer may therefore be more sceptical to further increase the cost of its products, and thus counteract the effort to improve sales figures. In addition, ESC fitment in Japan is still below that of Europe and North America, due to home-market legislation and few Japanese suppliers.

Also American-owned Opel, a manufacturer offering the technology as standard across its portfolio in North America, only reaches 58 percent of fitment rates in Europe. While the standard fitment rate for Asian OEMs stands at 54 percent in Europe, European mass OEMs competing in the same segment are at 49 percent.

On top of that, countries such as Denmark, Sweden, and Germany offer ESC fitment as standard in most models, while countries like Greece, Malta, and Iceland fail to offer the technology even as optional in most of the available models. Dealers operating in more than one European country, fail to provide the technology equivalently. It is therefore not just the responsibility of a dealer to ensure favourable uptake of optional fitment; OEMs need to ensure availability across vehicle model line-up.

"It is understandable that fitment rates are higher among premium OEMs in comparison to volume OEMs such as Fiat, Ford Europe, and others who are faced with packaging challenges to incorporate an ESC into their existing models," Nandakumar concludes. "But the anomalies in fitment rates among various models within similar price brackets is a concern that automobile manufacturers need to assess." The trend in fitment rates is expected to change as the technology is likely to become mandatory by September 2014, ensuring that all vehicle models manufactured since will bear ESC as standard.

If you are interested in more information on this topic or would like to speak to Mr. Nandakumar directly, please send an email to Katja Feick, Corporate Communications, at [email protected], with your full contact details.

About Frost & Sullivan

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