The Global Diesel Exhaust Fluid Market size is projected to reach $45.0 billion by 2027, at a CAGR of 10.3%. Stringent emission regulations leading to increased penetration of diesel SCR vehicles have fueled the growth of the market for diesel exhaust fluid. The increasing number of DEF pumps and the increasing average age of vehicles and miles driven are leading to the growth of the diesel exhaust fluid market.
Environmental regulatory agencies focus on the emissions of nitrogen oxide and particulate matter for off-highway engines. As the increasing emphasis is placed on health and the environment, government agencies throughout the world are implementing stringent emission norms to reduce emissions. These regulations are a significant challenge for engine manufacturers in the reduction of exhaust emissions, especially nitrogen oxide and particulate matter.
OPPORTUNITY: Rising demand for DEF in the construction equipment segment
The construction industry is booming; housing constitutes a major part of the construction industry. Asian countries and the US have seen significant improvements in economies, and with the rising population and standard of living, people are migrating to urban areas and spending on housing. According to the New Building Materials and Construction World Magazine ASEAN, a 10-country regional bloc comprising the Philippines, Indonesia, Malaysia, Thailand, Vietnam, Cambodia, Myanmar, Singapore, Laos, and Myanmar, highlights a USD 250 billion potential in construction in 2019. Thus, the ASEAN construction market is expected to grow at 7.5% in the coming years. Hence, the demand for construction equipment is increasing, leading to a rise in demand for engine coolants used in construction equipment. Diesel Exhaust Fluid (DEF) was introduced in the construction equipment segment in 2010. In North America, the SCR technology started to use diesel equipment for off-highway equipment, and hence the consumption of DEF in the off-highway segment has increased. The increasing demand for DEF in the construction equipment segment is expected to create a growth opportunity for the diesel exhaust fluid market during the forecast period.
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The report provides detailed profiles of the following companies:
- Yara International (Norway)
- China Petrochemical Corporation (Sinopec) (China)
- CF International Holdings, Inc. (U.S.)
- BASF SE (U.K.)
- Nissan Chemical Industries, Ltd. (Japan)
- Agrium Inc. (Canada)
- Total S.A. (France)
- Royal Dutch Shell (Netherlands)
- Graco Inc. (U.S.)
- Cummins Inc. (U.S.)
- Air Liquide (France)
- PotashCorp (Canada)
Tier IV refers to air emission standards published by the US Environmental Protection Agency (EPA), with Stage V being equivalent to standards laid down by the European Commission or Euro standards. The PM limit of the Stage V standard is 97% lower than that of the Stage I standard, and the hydrocarbon (HC) + nitrogen oxides (NOx) limit is 94% lower to 0.40 (G/KWH). Such emission standards for off-highway equipment are expected to drive the demand for SCR and further boost the consumption of DEF in the global market.
The LCV segment is expected to register the highest growth rate in the diesel exhaust fluid market by vehicle type. The higher LCV sales in North America and higher adoption of SCR and DEF in LCVs to limit vehicle emissions to the permissible levels are majorly driving the LCV segment growth.
Higher construction vehicle sales and high SCR penetrations in construction vehicles in developed countries are the major factors driving the growth of the construction segment. Emission regulations. EU stage IV off-highway regulations push the OEMs and Tier-1 to employ the SCR in the exhaust system, which, in turn, will drive the DEF market. Moreover, upcoming emission norms for off-highway vehicles in developing regions the expected recovery of the global economy, and the construction sector post-2020 are the driving factors for construction segment growth.
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The demand for commercial vehicles, both, LCVs and HCVs are high in the North American region. The higher demand for commercial vehicles is driving the growth of the DEF aftermarket as average miles driven, DEF tank size, and rate of dosage for commercial vehicles is high compared to passenger cars. The growing diesel vehicle share in vehicle sales is another factor driving the DEF demand in the region.
According to MarketsandMarkets, the US has the highest vehicle parc, globally. The US had a vehicle parc of 296.6 million units in 2020, which is the highest in a country across the globe. The number of commercial vehicles on road in the US was 171.2 million units in 2020. Diesel trucks, buses, and cars sold in the US after 2010 follow the EPA Tier-II emission standards implemented to reduce NOx emitted from the exhaust system, and therefore these vehicles are being equipped with SCR. The US also leads in terms of initiatives to lower carbon emissions in a country. This has resulted in the US being the largest aftermarket for diesel exhaust fluids in the world. In addition, the average miles driven by vehicles in the US is higher as compared to other countries worldwide. Furthermore, the average age of vehicles in the country has increased from 10.5 years in 2010 to 11.9 years in 2020. These factors are expected to boost the replacement demand for diesel exhaust fluid in the coming years.
