What started in 2018 as a strong joint venture between two successful companies in their traditional markets is scheduled to end in 2020.
Osram Continental was formed to take advantage of the rapid transition of motor vehicle lighting to LED-based fixtures by offering semiconductor-based lighting products. The long-term goal of the JV was not just to manufacture efficient LED vehicle lights, but also to connect the lighting to other vehicle systems to make travelling safer for the occupant and for other vehicles on the road.
Despite the rapid transition to LED-based vehicle lights, global motor vehicle production has stalled. According to Freedonia analysts, global motor vehicle production declined slightly in both 2018 and 2019 before sharply contracting in 2020 due to COVID-19 pandemic. This is the same length of time that Osram Continental has been active, and it has not provided the company with a strong market environment in which to launch. Currently, Continental doesn’t expect global vehicle production to return to 2017 levels until 2025 (Freedonia estimates have production returning to 2017 levels in 2023). Either way, the recovery is looking long. Securing contracts with motor vehicle OEMs is critical to Osram Continental’s success, and the recent weak performance and slow expected rebound have dealt a severe blow to the profitability of the venture.
All is not lost, however. The two companies are committed to continuing their development of automotive lighting products through a future cooperative agreement.
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including our soon-to-be-released Global Motor Vehicle Outlook update as well as several Freedonia Focus reports (Motor Vehicles: United States, Hybrid & Electric Light Vehicles: United States, and Motor Vehicle Leasing: United States. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.