Automotive All-Wheel-Drive Market - Growth, Trends, and Forecasts (2023 - 2028)

The automotive all-wheel-drive market is anticipated to register a CAGR of over 7.5% during the forecast period, 2022-2027.

The COVID-19 pandemic has negatively impacted the market as lockdowns and shutdowns of manufacturing facilities of significant OEMs resulted in decreased production and sales of cars across the globe. However, the market has regained momentum as economic activities resume and vehicle production also rises worldwide.

Key Highlights

• The passenger car sales decreased in 2021 to around 2.39 million units due to the Covid-19 pandemic; as the situation usually gets, the passenger car sales have risen to 2.72 million units.

The developments and improvements in the all-wheel-drive (AWD) system and its penetration into the growing electric vehicles market are the significant factors that are anticipated to propel the growth of the market studied during the forecast period.

Key Highlights

• In June 2022, Hyundai India plans to launch its all-new AWD electric car Hyundai Ioniq 5 in mid of August 2022.

Improvements in the AWD capabilities and the cold weather condition are driving factors for the North American and European regions to anticipate a potential demand for AWD in the future. The market for luxury vehicles has boomed in the Asia-Pacific region. It is expected to continue to increase at the highest pace among all vehicle categories during the forecast period.

Improved safety, stability, and drive control are some of the factors which may accelerate the growth of the market studied. Earlier, these systems were available only in high-end cars, but the introduction of small passenger cars and hybrid electric vehicles has increased global demand.

Emerging players in the automotive industry continuously focus on developing and improving each part associated with the AWD system to enhance the AWD performance and fuel economy further.

Key Market Trends

The Increasing Demand for Sports Utility Vehicles

Factors such as sportier handling and increased grip and traction with all-wheel drive have resulted in the demand for passenger cars, especially SUVs, compared to sedans and crossovers.

The growth in SUV sales has been consistently increasing during 2018-2022 due to the improving economic conditions across both the developing and developed countries. More than 65% of the SUVs on the road are currently installed with all-wheel drive powertrain systems. For instance,

• The volume of SUVs volume, reaching 200 million units in 2019. SUVs represented some 29.6 million global car sales a year later; In 2020, electric SUVs added another 1.1 million units.

Safe on-road drivability in winter or any hazardous climatic conditions is a significant factor driving people to choose passenger cars installed with all-wheel drive type powertrain systems, especially in North America and Europe. Also, all-wheel drive is anticipated to be deployed at a considerable rate in electrified powertrain cars, such as hybrid, plug-in hybrid, and battery-electric vehicles. For instance,

• Tesla Inc., one of the prominent manufacturers of electric vehicles in the world, has started shifting from rear-wheel drive with one motor at the back to all-wheel drive, where two electric motors drive each axle. Tesla's models have already begun to opt for the latter feature.

Thus, all-wheel drive is anticipated to experience growth from the ICE cars sector and the growing hybrid electric cars during the forecast period.

The Growing Demand for AWD in Asia-Pacific

The Asia-Pacific region has always been on top in terms of car production and sales compared to other areas. For instance,

• In 2021, over 21 million passenger cars were sold in China, making it the largest market in the Asia-Pacific region. Japan was the second biggest market in the area, with over 3.6 million unit sales in 2021.

With advanced technologies, the trend of shifting vehicle operations from complex mechanical systems to electronically controlled systems has become possible and is now playing a vital role in uplifting the automotive industry. AWD is one such system that has experienced the above trend significantly over the past five years. Most of the OEM car makers have now launched an affordable AWD Suv in a market that will target the majority of customers. For instance,

• In March 2022, The Mahindra Thar is currently the most affordable 4x4 car available in the Indian market, with a base price of Rs 13.17 lakh that goes all the way up to Rs 15.53 lakh (both prices, ex-showroom).

Players in the automotive industry continuously focus on developing and improving each part associated with the AWD system to enhance the AWD performance and fuel economy further. For instance,

• In January 2020, Japanese automobile manufacturer Nissan revealed a high-power, twin-motor all-wheel-control test car equipped with new technologies being developed for the company's next generation of EVs.

Competitive Landscape

The automotive all-wheel-drive market is dominated by several players, such as BorgWarner Inc., Toyota Motor Corporation, Eaton Corporation PLC, Continental AG, Haldex Group, JTEKT Corporation, Dana Incorporated, Nissan Motor Co. Ltd, and Magna International Inc. These companies are expanding their business by new innovative technologies so that they can have the edge over their competitors.

• In February 2022, Continental AG tires launched new cross-contact ax6 tires for SUVs in India. New continental cross-contact ax6 all-terrain SUV tires offer excellent durability, low noise, and shorter braking distance on wet roads, as the company claims.
• In February, 2022, Nissan Motor Co., Ltd., and Nissan Motorsports International are developing the Nissan Z GT500 based on the Nissan Z, the all-new sports car that represents more than 50 years of ongoing passion and
• In February 2020, Chrysler upgraded the Pacifica model with an All-wheel drive. With this update, Chrysler joins Toyota as the only brand to offer all-wheel drive, helping counter the shift to SUVs.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support