Europe lagging behind on standard ESC deployment

According to 2097 Frost & Sullivan, the European Electronic Stability Control (ESC) market is expected to reach a market value of close to US$2.7 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 per cent fitment across the eight segments they cater to.

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.

“The mass market segments, though, work differently,” says Frost & Sullivan 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 US$400 to US$1600 Euros, the average optional fitment rate is approximately US$740 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 994 Volkswagen and 1686 Toyota, follow a similar strategy by providing the technology as standard in 60-70 per cent and as optional in the rest of their models, a few others, such as 1674 Fiat and 1684 Hyundai, have decided to offer the technology not even as optional on over three percent of their entire product range.

Regarding rate diversity, 838 Nissan and 2453 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 4233 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, 278 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.