The automotive differential market is projected to reach USD 23.7 billion by 2027 from USD 20.0 billion in 2022, at a CAGR of 3.5%. The increase in demand for light commercial and heavy commercial vehicles, increased investment in infrastructure to boost the demand for construction equipment, and hence, the differential has led to the growth of the automotive differential market.
With the rising increase in global vehicle sales, government & regulatory bodies such as European Commission (EC) and the United States Environmental Protection Agency (US EPA) around the world have implemented stringent emission norms for controlling CO2 emissions. Stringent emission norms have shifted the global focus towards electric vehicles, results in exponential growth for these vehicles in recent years and simultaneously for differential in these vehicles. Further, rising adoption of AWD/4WD cars and multi-axle trucks in developed as well as developing countries such as India, and China would create the demand for differentials in coming years.
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The electronically controlled limited slip differential is projected to be a high-growth segment of the automotive differential market. The rise in penetration of electronic limited-slip differentials (ELSD) is one of the major trends that will gain traction in this market. The increased focus of the automotive OEMs to replace the mechanical parts with compact electrical components for fuel-efficiency will result in the adoption of ELSD in all vehicle segments. Further, increasing sales of premium cars could be the driving factors for ELSD as most premium cars are fitted with this type of differential owing to its excessive cost.
Asia Pacific is expected to be the fastest market for automotive differential industry growing at a CAGR of 4.0% during the period of 2022-2027. The market growth in Asia Pacific can be attributed to the rising vehicle production, increasing stringent emission norms and growing demand for comfort features especially in China, Japan, and India. The huge vehicle production in China offers lucrative growth opportunity for automotive differential in this region. Further, the countries in this region such as China, Japan, and South Korea accounted for ~93% of total vehicle produced. At the same time, the demand for luxury cars has increased in the region considerably, hence the demand for AWD/4WD drive system would increase which will create higher demand for differential as well. Mostly, these vehicles are installed with limited slip differential and torque vectoring differentials. Thus, rise in premium and overall vehicle production in Asia Pacific is expected to witness a robust growth during the forecast period.
Key Market Players:
Automotive differential companies are GKN Driveline (UK), Eaton Plc (Ireland), American Axle & Manufacturing Company (US), Dana Incorporation (US), Linamar Corporation (Canada) and BorgWarner Inc. (US). These companies adopted new product launches and expansion to gain traction in the automotive differential market
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