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 automotive differential market is primarily driven by increasing demand for the vehicles (PCs, LCVs, and HCVs). Further, rising demand for premium cars has significantly created the demand for AWD/4WD drive system vehicle results in increasing demand for automotive differential.
Countries such as the US, Canada, Germany, France, Japan, and South Korea lead the premium car market, constituting more than 90% of total production globally. For instance, in 2021, the production of luxury SUVs in the US out of total luxury cars was around 75%. Further, rising stringency in vehicular emissions and fuel economy parameters has led manufacturers to develop technologically advanced differential such as light weight differential. Rising growth of electric and PHEV vehicles is also expected to create the lucrative opportunity for differential manufacturers.
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The automotive differential market is led by globally established players such as GKN Driveline (UK), Eaton plc (Ireland), American Axle & Manufacturing Company (US), JTEKT Corporation (Japan), Dana Inc. (US), BorgWarner Inc (US), Linamar Corporation (Canada), Schaeffler AG (Germany), ZF (Germany), and Hyundai Wia Corporation (South Korea). New product development, expansion, acquisition, and partnership strategy have been the most dominating strategy adopted by major players from 2018 to 2022, which helped them to innovate on their offerings and broaden their customer base.
Dana Inc is a leading global player in the automotive differential market. The company has strong focus on new products development. The company spends around 2.0% of its total revenue on R&D activities. The company has adopted the strategies of collaboration for new product development in differential market. For instance, in May 2022, the company has formed strategic partnership with Lion Electric Co. Ltd to supply electric drive system including electric motors, inverters, and controllers, as well as axles and driveshafts for all Lion Electric platforms.
BorgWarner Inc. is engaged in design and manufacturing of engine and drivetrain components. The company has wide range of product offerings for electric, hybrid and ICE vehicles. The company operates in engine and drivetrain segment. The Drivetrain segment develops and manufactures mechanical products for automatic transmissions and all-wheel drive vehicles and rotating electrical components for light commercial vehicles. The company develops, manufactures, and sells automotive differential under the drivetrain business segment The engine segment is a major contributor to the company’s overall revenue. The company has 68 manufacturing assembly and technical locations worldwide. The company has strong focus on new product development.
GKN Driveline is another leading player in this market. GKN is specializing in developing, manufacturing, and supplying drive systems for electric and conventional vehicles through its driveline and e-powertrain division. In April 2018, Melrose Industries PLC has acquired all businesses of GKN Limited. The company invests around 3% of its revenue on R&D activities. The company has adopted the strategies of collaboration. For instance, in January 2020, the company has formed the joint development agreement with Delta electronics to develop integrated 3-in-1 e-drive system for power chassis. GKN has operations in North America, Europe, and Asia Pacific, with 51 manufacturing facilities, 6 technology and innovation centers, and production footprint in 20 countries worldwide.
American Axle & Manufacturing Company is engaged in design and manufacturing of driveline and metal forming technologies to support electric, hybrid, and internal combustion engine vehicle. The company operates through mainly two business segments i.e., driveline and metal forming. It sells differential under driveline business segment. The company generates most of its revenue from the driveline segment. The company has strong focus on R&D activities. For instance, in 2021, the company has spent around USD 116.8 million on research and development. The company has operational presence in all major regions, including North America, South America, Asia, and Europe.
Automotive Differential Market by Type (Open, Locking, Limited Slip, Electronic Limited Slip, Torque-Vectoring), Drive Type (FWD, RWD, 4WD/AWD), OE Component, On- & Off-Highway Vehicle, Electric Vehicle, Aftermarket & Region - Global Forecast to 2027
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