Automotive LED Market Has a Bright Future With the Rise of Replacement Products, Says TrendForce

The value of the global LED market has been growing at a crawling pace as demand for backlight LEDs contracts. Automotive LEDs, however, are one of the few sizable application markets that are developing rapidly along with other smaller markets for niche industrial LED products. The latest analysis by LEDinside, a division of TrendForce, finds the replacement of traditional light bulbs with LED light sources continues steadily in the automotive lighting market despite the slowing growth in the regional automobile markets worldwide during the second quarter. While the percentage of LED-based products in developed markets continues to expand, emerging markets are also seeing gradual adoption. LEDinside projects that the value of the exterior automotive LED market will reach US$1.57 billion this year and will grow at a CAGR of 6% in the 2016~2020 period.

In the case of China’s automotive lighting market, Duff Lu, research manager for LEDinside, said the use of LEDs is still mainly influenced by cost considerations. LEDs used in interior automotive lighting and rear position lamps, for example, share similar specifications with LEDs used in the general lighting and backlight applications. Hence, the penetration rates of LEDs in China’s interior automotive lighting and rear position lamp segments are now over 70%, respectively. These figures are close to the international average. Chinese automotive lighting manufacturers have also made rapid progress in the technological development of daylight running lights (DRLs) in recent years and some have begun to use standard LEDs for their DRL products. LEDinside projects that the penetration rate in China’s DRL segment will reach 47% in 2016. As for high-power LED packages used for high and low beams, Chinese manufacturers still rely on imports because most domestic suppliers are not mature enough technologically to produce these components. Hence, LED penetration rate China’s high/low beam market is currently less than 3%. 

Lu pointed out replacing traditional light bulbs in an automotive luminaire can only be done by opening up the luminaire’s back cover and pull the light bulbs out from their sockets. However, LED products tend to be integrated or systematic in design and most LED automotive lighting products in the OEM market come as an entire luminaire assembly. They thus are not suited for the conventional replacement method. To expand the adoption of LEDs, LED module suppliers are developing replacement or plug-in light bulb products that can substitute traditional light bulbs in an automotive luminaire. The growth of these replacement products are expected to become a major trend within the market. Currently, LED replacement automotive light bulbs are mainly for the performance market (PM), particularly China’s. While high-intensity discharge (HID) lamp is the leading technology in the Chinese PM, LED has an opportunity to break into the mid-range segment between high-end and low-end HID replacement products for headlamps. Eventually, LED may erode HID’s market shares in both high- and low-end of the PM.

Lu added that the penetration rate of LED headlamp luminaires in the global headlamp market is on the rise due to declining prices and increase in products’ luminous efficacy. The market positioning of LED headlamp luminaires has also expanded from the high-end to the mid-range vehicle models. On the other hand, LED replacement light bulbs for headlamps could later become a challenge to the integrated design of LED headlamp luminaires on account of better pricing. 

As LED headlamp luminaires are still in the early development phase, standards governing their design and production are relatively incomplete. Furthermore, these products are mainly for retail sales, so consumers’ selections are based primarily on pricing. “An assortment of packages will enter the market for LED headlamp luminaires in this initial period,” noted Lu, “However, only packages that can arrange LED light sources in stripes or line arrays  will be the mainstream in the future because they can be adjusted to imitate different original reflective structures. These stripe/line-array packages will be instrumental in changing the competitive landscape of the automotive lighting market.”