The increasing adoption of all-wheel-drive (AWD) vehicles, rising demand for commercial and heavy-duty vehicles, and increasing focus on higher road traction and fuel efficiency are some of the key driving factors for the global automotive differential market. Resultingly, the industry generated revenue of $19,959.3 million in 2020.
In 2020, the COVID-19 pandemic hurt the automotive differential market by disturbing the supply chains, impeding business growth, and creating uncertain demand scenarios. The sale of automotive differentials is directly related to automotive production and sales; thus, the market has suffered due to low vehicle manufacturing. However, as the condition is improving and the production is heading toward normalcy, the negative impact on the automotive differential industry is expected to decrease in severity with time.
The automotive differential market is categorized into front-wheel drive (FWD), rear-wheel drive (RWD), all-wheel drive (AWD)/four-wheel drive (4WD), on the basis of drive type. Among these, the AWD/4WD category is set to show the highest CAGR in the forecast period. This will mainly be because of the benefits associated with AWD/4WD vehicles, such as better traction in slippery conditions, thus leading to better performance and handling.
The market is divided into passenger vehicle and commercial vehicle, based on vehicle type, of which the passenger category is set to generate the higher revenue. This will mainly be because of the higher manufacturing rate of passenger vehicles compared to commercial vehicles. For instance, in 2020, the total number of passenger vehicles manufactured around the world was around 55 million, while the number of commercial vehicles manufactured was 21 million.
Geographically, Asia-Pacific (APAC) is projected to generate the highest revenue in 2030. This will mainly be because China, Japan, and South Korea dominate the global vehicle manufacturing industry. In 2020, they together manufactured over 36 million vehicles, which was over 47% of the total vehicles manufactured in the world. This is also why this region will witness the fastest growth in the demand for automotive differentials during the forecast period.
Players in the automotive differential market are constantly introducing new, technologically advanced products in order to enhance their position. For instance, in August 2020, Eaton Corporation plc unveiled an electronically controlled, scalable limited-slip differential that can be used on multiple vehicle platforms to improve driver safety and performance.
The major players operating in the global automotive differential market are American Axle & Manufacturing Inc. (AAM), BorgWarner Inc., Dana Incorporated, Eaton Corporation plc, Hyundai Wia Corporation, JTEKT Corporation, Linamar Corporation, Melrose Industries PLC, Schaeffler Technologies AG & Co. KG, and ZF Friedrichshafen AG.