Automotive Interiors Market

Market Overview

The global automotive interiors market size was valued at USD 126 billion in 2021. It is estimated to reach USD 186 billion by 2030, growing at a CAGR of about 5% during the forecast period (2022–2030).

The interior of a car, which is made up of parts like headliners, cockpit modules, door panels, automobile seats, and others, is intended to be comfortable, secure, and soundproof. The upholstery, interior trims, and other embellishments significantly affect an automobile's marketability. A buyer's judgment of a vehicle's quality is influenced mainly by the car's interior. Previously only a minor factor in the market, automotive interiors are now one of the most crucial factors for any automobile purchase.

Manufacturers are inventing lightweight materials for automobile interiors to meet the demand for fuel-efficient and lightweight systems, driving the automotive interior industry. Due to increased consumer expectations and intense competition, numerous automobile manufacturers now offer entertainment systems, even entry-level vehicles. The infotainment systems subcategory is anticipated to develop the fastest, which may increase the infotainment market.

Market Dynamics

Global Automotive Interiors Market Drivers

A Range of Lightweight, Cutting-edge Materials, and a Creative Finish

New materials and cutting-edge technologies have enabled manufacturers to lighten vehicles and provide more comfortable interiors. The seating system is where weight reduction is mainly accomplished in car interior components. Adient is one of the various manufacturers specializing in creating and offering light interior solutions. Vehicle efficiency can greatly benefit from using lightweight materials. Industry analysts estimate that a 10% weight decrease can save between 5–7% of fuel.

In addition, OEMs have access to several plastic choices for use in interiors. For instance, vehicle doors and instrument panels are frequently made of polyvinyl chloride (PVC). ABS, which has a very cheap production cost and is commonly used in dashboards, is a synthetic resin. Depending on the vehicle segment, OEMs have also used various finishes for the dashboards and seats of automobiles. OEMs favor inexpensive plastics and interior finishing in price-sensitive automobile markets. Luxury automakers, on the other hand, favor premium plastics and finishes. The market for vehicle interiors will be driven by the OEMs' and suppliers' wide range of alternatives.

Trend of Semi-Autonomous & Autonomous Vehicles

The increasing prevalence of autonomous and semi-autonomous vehicles will increase the demand for cutting-edge automobile interior technologies because they will require more integration of advanced technology than conventional vehicles. The cabin of autonomous vehicles needs to be constructed in a way that makes switching to driverless mode possible. Nissan anticipated that by 2030, assuming no such vehicles are commercially released, there will be a penetration of this sort of car of close to 15%.

Auto industry behemoths, including Mercedes-Benz, Audi, Ford, Toyota, BMW, and Volkswagen, are focusing on this market. The number of vehicles that are partially autonomous has increased. With the newest technologies and cutting-edge designs, concept automobiles will gradually feature more automotive interior applications. The demand for automotive cockpit electronic systems may increase as these vehicles become more prevalent.

Global Automotive Interiors Market Restraint

High Cost and Volatility in Raw Material Prices

Although advanced vehicle interior component costs have been reduced over the past few years, they are still more expensive than standard interior electrical components. For instance, a vehicle's electronic systems used to account for just 1% to 2% of the cost of the vehicle, but this has changed due to the growing demand for features that improve the user experience and convenience. Today, these systems account for 8 to 12% of the cost of the vehicle. As a result of their high price, high-tech features and solutions are now only available in high-end luxury vehicles.

Some features that have high development costs and are typically found in premium segment passenger cars include 8-/10-way adjustable front row seats, middle row captain seats with reclining functionality, multi-information displays, and infotainment systems with cameras, gesture controls, dual-zone climate control, ventilated seats, and massaging seats. This is so because people who purchase luxury cars are willing to pay more for comfort and new technology. Therefore, these cutting-edge technologies would not be widely used in low-end or economic-class cars until their price is reduced. The development of all advanced and cutting-edge vehicle interior components in the automotive market will be hampered by this.

Global Automotive Interiors Market Opportunities

Increasing Penetration of Larger Displays

Automakers are experimenting with the size and quantity of screens, as the significant models, which will hit the market in coming years, have been designed with a more substantial number of screens. In the last few years, the infotainment system has improved tremendously. Many players have introduced their vehicles with big screens in the market. The upcoming 2021 S-Class from Mercedes will be packed with screens (the central unit will be a 12.8-inch OLED screen with haptic feedback). The new car has replaced many physical buttons in the past version with controls on the screens around the cabin. This screen, which has superior processing power, particular pixels for extreme clarity, and compatibility with swipes, gestures, and voice commands, also has biometric security.

The increase in the size and number of screens will come hand in hand with the new development in infotainment systems. With a more significant number of autonomous vehicles coming into the market, many people are likely to prefer a vehicle with a bigger screen and the best infotainment system over others. This may result in the infotainment systems market growth over the forecast period.

Regional Analysis

Dominance of Asia-Pacific Over Others

By region, the global automotive interiors market is segmented into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

Asia-Pacific accounts for the largest market share and is estimated to grow at a CAGR of 5.1% during the forecast period. The automotive industry is transforming rapidly, and China is one of the main drivers bringing that transformation. The local automakers are innovating with vehicles to fulfill the future demands of roads by developing electric vehicles for shared mobility. Furthermore, among the countries worldwide, Japan is expected to show massive deployment of advanced interiors in vehicles during the forecast period, owing to the countless number of tier players and automakers. For instance, in September 2020, Toyota Boshoku announced that Toyota Motor Corporation uses its seats and other interior components in its new Yaris Cross models. Toyota Boshoku has developed a clutch box with built-in manual clutches that transfer driving force according to control knob input, enabling a single motor's six-way operation. Such instances drive market growth.

Europe is the second-largest region and is estimated to reach USD 40 billion by 2030, growing at a CAGR of 5.1%. The EU-based companies, namely Volkswagen, BMW, Daimler, and Groupe PSA, supply about two-thirds of cars sold in the United Kingdom. About 80% of the cars manufactured in the United Kingdom are exported, of which 54% go to the European Union. Automakers are constantly upgrading the interiors. To provide the best interior experience to customers, significant automakers in the market are developing new technologies and materials to stay ahead of their competitors. Important OEMs in the country are introducing their new models with the updated and feature-loaded interiors in the market. The automotive interiors market is highly dependent on vehicle sales and production. Thus, the developments mentioned above are expected to drive the market's growth at a steady pace.

North America is the third-largest region. Major automakers in the region are investing in the expansion of their facilities and in the latest technologies to make the vehicles future-ready and provide the best driving experience to customers. For instance, In October 2020, The International Automotive Components Group North America Inc. (IAC) announced its plans to invest over USD 55.9 million in expansion projects at two Alabama facilities. The facility may produce door panels and overhead systems for OEMs. In 2019, General Motors announced its plans to introduce new in-vehicle technology for upcoming cars. The company plans to integrate Google's Voice Assistant, Navigation, and App Ecosystem to launch GM infotainment systems in 2021. The growing number of electric vehicles in the United States is boosting the demand for interior products in the country.

Segmental Analysis

The global automotive interiors market is segmented by vehicle type, component type, and region.

By vehicle type, the global automotive interiors market is segmented into Passenger Cars and Commercial Vehicles.

Passenger Cars account for the largest market share and are estimated to grow at a CAGR of 5% during the forecast period. Passenger cars hold the largest share in the automotive interiors market because of their features and quality-rich interiors. With the increasing sales of economical and luxury passenger cars, the preference for advanced and comfortable interiors has also increased. Currently, OEMs are offering convenience features, such as ventilated seats, touchscreen infotainment systems, ambient lighting, and several other features, in mid-variant models, which were earlier available only in the top-end variants. Many vehicle interior companies provide premium features, especially in the luxury passenger car segment. For instance, in 2019, the electronics giants Panasonic or TI, and Qualcomm, are providing solutions to Harman's infotainment systems with digitalized features, which are becoming more common across the luxury passenger vehicle segment.

Commercial Vehicles, like pickup trucks, vans, trucks, and buses, have the highest demand for interiors, such as infotainment systems and body panels. Environmental and government concerns about harmful emissions have forced manufacturers to increase their focus on producing eco-friendly and lightweight commercial vehicles. Thus, many economies and environmental regulatory originations push automakers to shift to electric mobility.

By component type, the global automotive interiors market is segmented into Instrument Panels, Infotainment Systems, Interior Lighting, Body Panels, and Others.

Body Panels account for the largest market share and are estimated to grow at a CAGR of 4.9% during the forecast period. To comply with government requirements about glasshouse gas emissions, manufacturers have begun implementing lightweight body panels in automobiles due to increased automotive production concerns around increasing glasshouse gas emissions. Since they are lighter overall, lightweight automotive body panels can improve a vehicle's performance and fuel efficiency. For instance, a 25% weight reduction in cars reduces glasshouse gas emissions by 3.5 to 5.0 metric tonnes throughout an average car's lifetime. Increasing automotive generation and an increasing focus on reducing weight are anticipated to drive the market demand for lightweight body panels over the forecast period.

Infotainment System is the second-largest segment. The infotainment system has been evolving over the past five years, where players have started equipping a vehicle with several features, like from CD player, Bluetooth, USB port, lighter port, aux port, video panel, radio, GPS, multiple speakers, and control panels, to offering advanced features, like touch screen and voice-activated systems, which can easily connect to smartphones. The market for infotainment systems may be further strengthened by investments being made by automobile manufacturers and tech companies. Furthermore, the continuous launch of vehicles with advanced infotainment systems further accelerates the demand for infotainment systems worldwide.

Instrument Panels include analog gauges, display systems, and panels made of polycarbonate/ acrylonitrile-butadiene-styrene (ABS) alloys, polyphenylene ether (PPE) and styrene-maleic anhydride (SMA) resins, and other carbon-chain compounds. Instrument panels are the essential components in the automotive cockpit for drivers, located directly behind the steering wheel. Digital meters for fuel measurement, speed, and odometer are being implemented across many passenger cars and commercial vehicles of all classes. The increasing demand for new vehicles is responsible for increasing the market share of instrument panels.

Recent Developments

• July 2022 - Panasonic Corporation (hereinafter referred to as Electric Works Company) announced that Panasonic Electric Works Vietnam Co., Ltd., in charge of producing and selling wiring devices, lighting, and IAQ (Indoor Air Quality), will speed up the growth of its electrical construction materials business in Vietnam to more than triple sales in FY2031 from FY2022.
• January 2022 - Panasonic Corporation created a method for producing far-infrared aspherical lenses in large quantities that would enhance the functionality of cameras and sensors. These lenses are chalcogenide glass, which has outstanding far-infrared transmission properties.