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RFID Drives into Auto Manufacturing

Two of the leading research firms for the RFID market have released reports on the technology's application in the automotive sector, both of which predict the waning dominance of vehicle immobilizers as the technology is increasingly adopted in the manufacturing process.
Mar 21, 2006This article was originally published by RFID Update.

March 21, 2006—Two of the leading research firms for the RFID market have released reports on the technology's application in the automotive sector. ABI Research today announced Automotive RFID Markets: Vehicle Entry and Security Systems, TPMS, Automotive Manufacturing, ETC and AVI, and last week Venture Development Corporation published key findings from the Automotive Vertical Market volume of its annual RFID Business Planning Service.

According to ABI Research, RFID has been in use in the automotive vertical for 20 years, but only to a limited extent. That is starting to change as the sector increasingly adopts the technology for a wide variety of applications. Vehicle entry and security, which has become much more common in the last few years, is currently the dominant application. According to ABI, 40% of new cars manufactured in North America come equipped with RFID immobilizers, and the worldwide revenues generated last year by this one application were $3.7 billion. But RFID's role in automotive will now expand beyond immobilizers, into manufacturing and supply chain applications. Identec, Escort Memory Systems, and Siemens are cited as active vendors providing RFID solutions to automotive manufacturing. Asia is the leading region in the application of RFID to the vehicle manufacturing processes, followed by Europe, then North America.

Venture Development Corporation reached the same conclusions as ABI with respect to the vehicle security application of RFID: its role is dominant today, but waning. Michael Liard, director of VDC's RFID Practice, said in a statement, "The increase in new RFID applications suggests that the technology is moving beyond traditional application niches of automobile immobilization and security/access control." VDC sees compelling opportunities for RFID usage in the automotive manufacturing process, citing improved visibility, decreased shrinkage, increased automation, trading partner collaboration, and compliance as potential benefits. RFID's continued adoption in manufacturing is further ensured by automaker's sophistication with respect to the technology. "Users in the automotive market are highly experienced with the benefits and challenges of RFID, and are expected to rapidly integrate new solutions as they become technologically and financially feasible." VDC notes that due to the automakers' purchasing volume, they are in a position to drive RFID technology adoption up to their suppliers and throughout their supply chains.

Revenues generated by RFID in the automotive vertical were $312 million last year. According to VDC's projections, the market will grow at a compounded growth rate of 20% for the next five years, reaching $765 million in 2010.
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