The global exhaust system industry is projected to grow from USD 36.9 billion in 2021 to USD 47.9 billion by 2026, at a CAGR of 5.3% during the forecast period. Growing vehicle emission is leading to stringent emission and fuel economy regulations and growing penetration of after treatment devices in combinations are the major factors driving the growth of the exhaust system market.
Passenger cars, light commercial vehicles, and heavy commercial vehicles are classified as on-road vehicles. Most countries follow Euro standards such as Euro 5 and Euro 6. The particle mass and particle number standards for diesel cars in Euro 6 are the same as those in Euro 5. Limits on particle mass emissions for diesel cars have nonetheless been reduced by large amounts since the Euro 1 standards were introduced. The Euro 6 particle mass limits for diesel cars represent a reduction of 9
6% from Euro 1 limits. Euro 6 is a significant advancement over Euro 5 with regard to NOX limits. The NOX limit declines from 0.18 g/km to 0.08 g/km, a reduction of 56%. Explicit NOX limits were introduced at the Euro 3 level, and in the Euro 6 standards, the NOX limit is 84% lower than the Euro 3 level. Emerging economies with higher vehicle production like India launched new standards of BS 6 emission standards on April 1, 2020; the diesel vehicle nitrogen oxide (NOx) limit was declined from 250 mg/Km in BS5 to 80 mg/km in BS6.
Countries adhering to the Paris Agreement for a reduction in vehicle emissions are planning to introduce more stringent emission regulations. Countries such as Brazil, Russia, and South Africa are planning to introduce emission regulations like Euro 5 and Euro 6 post-2023. This will result in more emission stringency and a reduction in vehicle weight. Manufacturers are shifting toward exhaust after-treatment devices through advanced components and technologies to comply with the emission standards. Thus, this is expected to fuel the demand for exhaust systems in on-highway vehicles. Thus, this is expected to fuel the demand for exhaust systems.
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European countries, along with China and India, have introduced stringent emission regulations to reduce the emissions of nitrogen oxide as per the International Council on Clean Transportation (ICCT), approximately 80% of deaths (for both excess NOx and total diesel NOx) occurred in three geographies—the EU, China, and India. For example, India introduced BS 6 regulations in 2020 to reduce the NOx emission limits to 80mg/KM 6. The demand for exhaust systems with after-treatment devices is growing across the globe due to continuous requirements of decreasing vehicle emissions. With the growing vehicle production and recent and upcoming emission regulations in other countries (BS-VI in India, Euro 7 in Europe, whereas China is planning to upgrade its emission regulations to China 6 by 2021), these are the potential growth drivers for exhaust system suppliers during the forecast period.
The passenger car segment is expected to lead the market for exhaust systems. The passenger car segment with almost 79% share in global vehicle production is expected to lead the vehicle type segment. Stringent emission norms for passenger cars, primarily in the US and European countries, are driving this segment.
The probability of replacing after-treatment devices in heavy trucks is higher than in passenger cars and LCVs, as these trucks are used for long road trips. This, in turn, drives the use of after-treatment devices that comply with the new emission standards and modifications in the new as well as on-road HDVs. Thus, the HDV segment is expected to lead the aftermarket for exhaust systems by value during the forecast period.
The market in the Asia Pacific region is projected to be the largest. Countries such as China, Japan, India, South Korea, Thailand, and the Rest of Asia Pacific are considered under Asia Pacific. This has emerged as a hub for automotive production in recent years owing to the changing consumer preferences, increasing disposable income of the middle-class population, and cost advantages for OEMs. China is the largest contributor in terms of vehicle production in the Asia Pacific region. Of the total vehicle production, China contributed 32.3% in 2020. Japan is the second-largest vehicle-producing country, which contributes 10.2% to global vehicle production. Asia Pacific is the largest market for small passenger cars, and more than 80% of the passenger cars in this region run on gasoline. In this region, the installation rates of DPF, DOC, LNT, and SCR in diesel vehicles are low compared to Europe and North America. The installation rates are expected to increase in the coming years because of various upcoming norms in countries like China and India. OEMs are also moving toward the direct injection engines for gasoline cars to meet the upcoming strict emission norms, and this trend is expected to grow rapidly during the forecast period. The upcoming emission norms in Asia Pacific are a major factor driving the exhaust system market.
Key Market Players
Tenneco Inc.(US), Faurecia (France), Eberspächer (Germany), Friedrich Boysen GMBH & CO. KG (Germany), and BENTELER International (Austria) are the major companies operating in the global exhaust system market. These companies adopted new product development and expansion strategies to gain traction in the exhaust system market.
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