Automotive Testing Inspection and Certification – Safety of Vehicles and Consumers

Automotive Testing Inspection and Certification – Safety of Vehicles and Consumers

By Knowledge Sourcing Intelligence Thought Articles

The global Automotive Testing Inspection and Certification market was valued at US$22.881 billion in 2020 and will increase to US$31.600 billion by 2027. Over the forecast period, this market is estimated to increase at a compound yearly growth rate of 4.72%.

Testing, Inspection, and Certification, abbreviated as TIC, is an independent sector that offers an array of conformity assessment services, including testing, validation, conformity declaration, and many others. TIC segment caters to a wide range of industry segments across the globe, including automotive. The objective of the council is to evaluate the goods in compliance with the safety of people and the environment. The council performs quality and safety controls via multiple conformity assessments, including industrial site inspections, management system auditing and certification, product testing, supply chain certifications, pre-shipment inspection, and others. Third-party TIC is a low-cost conformity assessment process that promotes higher compliance levels. It helps government agencies enhance efficiencies and exploit finite market surveillance resources, ensuring more consumer protection with safer products. It also aids manufacturers in lowering internal compliance costs and more effectively navigating global market regulations. Because it ensures that products are safe, secure, effective, trustworthy, of high quality, and sustainable, the TIC industry is a major contributor to the global economy and the quality of daily life throughout the world. The TIC Council aims to engage governments and key stakeholders in advocating for effective solutions that safeguard the public, promote innovation, and ease commerce. Automotive Testing Inspection and Certification Markets are bifurcated by service, sourcing, application, and geography. 

During the projected period, the increasing demand for automobiles and increasing advancements in the industry are bound to propel the automotive testing inspection and certification market. 

The increasing penetration of automobiles globally has propelled the automobile market size. According to European Automobile Manufacturers' Association, in 2021, about 79.1 million motor vehicles were produced globally, a 1.3% growth rate when compared with the former year. According to statistics, production is steadily rising in the developed and developing countries alike. In South Asia, and the Middle East and Africa, for instance, the production of automobiles increased by 15.6% and 10.0%, respectively, in 2021 compared to 2020. The emergence of electric vehicles and smart vehicles owing to the advancing technologies, like the Internet of Things, are further increasing the market size. Furthermore, the increasingly stringent government policies for vehicle standards and safety are causing multiple companies to outsource Testing Inspection and Certification services. Consumers are also becoming aware of the safety and quality of the products. TIC helps consumers by providing safer, high-quality, and consistently reliable products while being true to the brands' advertising claims. A failure of a component of a product can incur huge dissatisfaction from the consumers and financial loss in investments. TIC services help businesses attain long-term and medium-term savings by providing independent conformity assessment services and enables market access and market entry while increasing the trade volume. Furthermore, the increasing enforcement of laws for the vehicles to undergo Periodic Technical inspections of the vehicles is further expected to boost the Automotive TIC market. 

During the forecast period, Asia Pacific is likely to occupy a dominant share of the global automotive testing inspection and certification market. 

By geography, the automobile testing inspection and certification market is segmented into Asia Pacific, Europe, North America, South America, and the Middle East and Africa. The significant growth in the Asia Pacific region is attributed to the increasing demand for automobiles in the region. According to Organisation Internationale des Constructeurs d'Automobiles, OICA, Asia Pacific accounted for the production of 46,732,785 motor vehicles of 80,145,988 motor vehicles produced globally. China, Japan, India, and South Korea are the major countries dominating the market in the region, owing to the developing economies, surging per capita income, and increasing demand for automobiles in the said nations. For instance, according to the China Association of Automobile Manufacturers, China alone accounted for 26,082,220 units of motor vehicles produced in the region. While Japan, India, and South Korea produced 7,846,955, 4,399,112, and 3,462,404 motor vehicle units, respectively, in 2021. Furthermore, government initiatives like Make in India, and Make in China are further boosting the market, coupled with the strategic developments deployed by the automobile giants in the region. For instance, in September 2021, the government of India announced a notification stating a Postal Life Insurance Scheme for automobile components worth US$ 3.49 billion. Several of the factors mentioned above are expected to add impetus to the market's growth in the region. 

According to Analysts, differing standards and regulations for testing inspection, and certification across multiple regions are anticipated to restrain the market growth.

The different regional standards and policies are bound to create challenges for the acceptability and penetration of the products in the international market. The various policies and standards lead to different tax rates in foreign markets, thereby affecting the pricing and market growth in the region. According to European Automobile Manufacturers, for instance, countries like the US, UK, Japan, China, Russia, and South Korea have their own unique taxation framework in addition to VAT. Japan, for instance, Japan imposes a tonnage tax based on the weight of vehicles, along with a 10% consumption tax and an environmental performance charge. The VAT rate in the United Kingdom is 20%. Automobiles are also subjected to ownership taxes as well as an excise based on carbon emissions. Similarly, Russia also levies excise taxes based upon the horsepower of a vehicle along with the 20% VAT. And the value of excise taxes increases with the increase in horsepower. At the same time, the South Korean government charges a 5% consumption tax on the factor price and up to 7% acquisition tax in addition to the 10% VAT. Similar instances of conflict between international and local standards might hinder the market's growth.

Covid-19 Insights                       

The global pandemic had a negative influence on the automotive testing inspection and certification market. The mandated lockdown and social-distance measures enforced by multiple governments across the globe have resulted in the shut down of various production facilities, either partially or wholly. The exponential influx of the infected cases further reduced the workforce, severely impacting the productivity of several enterprises. For instance, according to the EU Member States, in Europe, all the automobile production facilities were completed closed for about 30 days on average. In countries like Italy, the closure lasted for as long as thirty days. Consequently, the automobile segment saw about 3.6 million vehicle production losses in the course of the first half of 2020, and by September, the demand for cars had dropped by 28.8%. Subsequently, the TCI service providers, too, suffered from the closure of factories and a lack of workforce. The closure of borders by several nations affected the supply chain network, further slowing down the market.