Global Differential Assembly Market Grows Steadily at a CAGR of 3.0%

Introduction

The differential assembly is a critical component of an automobile's drivetrain, and its primary function is to keep the RPMs of any two connected wheels proportional to one another. It is a necessary vehicle component regardless of where it is located. Its purpose is to allow the wheels to move at different speeds. The demand for differential assemblies is driven by the production of automobiles in various parts of the world. The growth of the all-wheel-drive (AWD) and four-wheel-drive (4WD) vehicle markets is expected to support the expansion of the differential assembly market. To conduct business in procuring differential assemblies, the original equipment and differential assembly manufacturers enter into long-term contracts and agreements.

Market Dynamics

Rising Use of Fuel-Efficient Vehicles Growing Number of Vehicles Equipped with (AWD) and (4WD) and Commercial Vehicles Drives the Global Market

As most automobiles are equipped with high-end electrical and electronics technology-driven systems, the automotive industry has seen significant technological evolution. Electrical and electronic components are used by original equipment manufacturers (OEMs) because of their high output efficiency and significant weight reduction of the corresponding component, resulting in a fuel-efficient solution. Furthermore, vehicle emissions are a significant factor because they are a source of harmful greenhouse gases that have a long-term impact on the environment. Governments worldwide are working together to establish uniform emission standards for motor vehicles to reduce greenhouse gas emissions and maintain a healthy environment. In addition, end consumers and drivers demand technologically advanced electrical components and systems for increased ease and comfort during the driving experience.

Drivetrains, powertrains, safety, and vehicle stability have all seen technological advancements in automotive manufacturing to increase vehicle operational efficiency. The buyers of automobiles demand that their vehicles have higher output efficiency and optimal performance in high-end driving operations. In addition, the demand outlook from end-users has moved more toward an increased emphasis on luxury, comfort, and driving dynamics. The evolving demand of end consumers is increasing interest in four-wheel drive and all-drive-wheel vehicles to achieve the desired levels of vehicle safety and dynamics. In addition, Original Equipment Manufacturers, also known as OEMs, are encouraged to adopt these drive systems to satisfy end-users ever-evolving demands. In recent years, sales of all-wheel drive and four-wheel drive vehicles have seen significant increases, and this upward trend is expected to continue in the years to come. These drive systems require two or three differential assemblies to perform their driving duties. Therefore, the market share of all-wheel drive (AWD) and four-wheel drive (4WD) vehicles is anticipated to drive demand for differentials and bevel gear in the distant future.

Production of Electronic Limited-Slip Differentials Creates Tremendous Opportunities

Electronic limited-slip differentials increase traction on dry and wet roads and improve handling, making them suitable for high-performance cars. Innovative automakers are developing electronic limited-slip differentials. Eaton introduced a new electronic limited-slip differential that functions as a traction management system; ZF also introduced a networked ELSD rear axle transmission. This transmission is for sports and off-road vehicles. This new differential is fully networked with the vehicle's braking system, improving driving dynamics, comfort, and stability. The production of electronic limited-slip differentials by automotive manufacturers is expected to provide a growth opportunity for differential companies.

Key Highlights

• The global differential assembly market was valued at USD 23.95 billion in 2021. It is expected to reach USD 30.99 billion by 2030, growing at a CAGR of 3.0% during the forecast period (2022–2030).
• Based on vehicle type, the global differential assembly market is segmented into passenger cars, light commercial vehicles, heavy commercial vehicles, and tractors. The passenger car segment is the highest contributor to the market and is estimated to reach USD 23.59 billion by 2030, growing at a CAGR of 3.6% during the forecast period.

Competitive Players

1. Dana Limited
2. BorgWarner Inc.
3. JTEKT Corporation
4. GKN
5. Hyundai WIA Corporation
6. American Axle & Manufacturing Holdings Inc.
7. Eaton
8. Schaeffler Technologies AG & Co. KG.
9. ZF Friedrichshafen AG
10. Linamar Corporation

Recent Developments

• April 2024- Tesla continued to innovate with their differential systems, focusing on improving the range and efficiency of their electric vehicles.
• March 2024- Sona Comstar, a preeminent international supplier of automotive technology solutions, has surpassed the landmark of 400 million differential gears and 6 million differential assemblies produced. The organization is renowned for its proficiency in the conceptualization and production of differential assemblies, as well as precision-forged differential gears and other driveline components that are utilized in a wide range of vehicle applications- off-road vehicles, passenger vehicles, battery electric vehicles (BEVs), and commercial vehicles.

Segmentation

1. By Vehicle Type    
   
   1. Passenger Car
   2. Light Commercial Vehicles
   3. Heavy Commercial Vehicles
   4. Tractors