Automotive Plastics Market

Market Overview

The global automotive plastics market was valued at USD 29.75 billion in 2022. It is projected to reach USD 43.83 billion by 2031, growing with a CAGR of 4.4% during the forecast period (2023–2031).

The rapid adoption of electric road vehicles and the application of polymers in automobiles are transforming the global automotive sector. Despite the growing prevalence of EVs, vehicles powered by ICEs are expected to retain a prominent share of the global vehicle fleet. These vehicles are also observed to be adopting polymer alternatives to conventional materials on account of the focus on reducing vehicle weight as a means to enhance fuel efficiency.

Automotive plastics play a vital role in the automotive sector, particularly in the manufacturing of technologically advanced and cost-efficient products with high safety and performance for modern cars, minivans, SUVs, and MUVs. The growing preference for high-performance plastics over conventional metals and rubber is projected to propel the market growth. The superior properties of plastics, such as flexibility and versatility, drive innovation in technology and design. Around 13 types of high-performance plastics are used in automotive hardware, wherein three types of plastics make up approximately 65% of the total high-performance plastics used in a car: polypropylene (32%), PVC (16%), and polyurethane (17%). Around 50% of all interior components of an automobile – including safety subsystem and door and seat assemblies – are made of plastics.

Market Dynamics

What are the factors driving the market growth?

Stringent Emission Regulations

The use of polymer matrix and carbon fiber composite reduces the overall weight of a vehicle by 25% to 75% - a key advantage that serves the goals of emission reduction and fuel conservation while supporting the additional weight of advanced safety equipment. Every kilogram lost from a vehicle's weight reduces its CO2 emissions by approximately 20 kilograms over its operational lifetime. As original equipment manufacturers aim to meet sustainability goals, automotive plastics will play a crucial role. Stringent regulations, including Corporate Average Fuel Economy, are also compelling automotive Original Equipment Manufacturers (OEMs) to discover other methods to reduce vehicle weight and, subsequently, improve efficiency.

Technological Advancements

In the market for automotive plastics, technological progress is a crucial trend gaining popularity. In 2021, for instance, Covestro AG introduced a new 3D printing material, recycled Polyethylene Terephthalate, which is utilized for 3D pellet printing utilizing a method known as fused granulate fabrication, which facilitates the production of large-scale parts. This technology has automotive applications for the production of interior components. Opportunities in passenger cars, light commercial vehicles, and heavy commercial vehicles bode well for the future of the global automotive plastics market. The development of plastics recycling technology is an emerging trend that will have an immediate impact on the industry's dynamics.

What are the factors restraining the market growth?

High Costs

Despite the fact that polymers are less expensive than metals, the design and production of polymer components are extremely expensive. This reduces the use of automotive plastics by small-scale automobile makers, which restrains market growth to some degree. Also, the cost of recycling plastics is high. The lack of understanding among producers about recycling these polymers and the absence of infrastructure remain impediments. In addition, the recycling of plastics is hindered by a lack of technology, infrastructure, and a limited market for recyclates. The recycling of plastics requires facilities with advanced technology. Therefore, recycling is difficult due to a lack of infrastructure, a knowledge gap, and the diverse mixtures of plastics.

Regional Analysis

Geographically, the global automotive plastics market is studied across North America, Europe, Asia-Pacific, and Latin America, the Middle East & Africa.

Asia-Pacific is expected to witness significant growth in the automotive plastics market, owing to the high production of automobiles in the region. Economic development and changes in consumer spending are accelerating the sales of automobiles in APAC, which in turn is bolstering the procurement of plastics for automobile manufacturing. China alone manufactured over 27 million vehicles in 2018, while India witnessed around 0.8% year-on-year growth in automobile production in the same year, as per the International Organization of Motor Vehicle Manufacturers. China is expected to dominate the Asia-Pacific automotive plastics market during the forecast period, owing to the rising demand for new energy cars, which is supported by changing government regulations. The country's use of automotive plastics has expanded as a result of the country's expanding middle class and rise in the number of buyers prepared to pay for new automobiles and after-sales services. In addition, an increase in demand for non-traditional vehicles, such as sports utility vehicles (SUVs) and new energy vehicles (NEVs), coupled with shifting government policies regarding carbon emissions and the provision of subsidies for new energy vehicles, is anticipated to drive the demand for automotive plastics in the region.

North America is expected to witness considerable growth in the automotive plastics market during the forecasted period. The region’s stringent regulatory scenario targets a decline in automotive emissions, spurring the adoption of high-performance plastics over conventional metals to reduce vehicle weight. For instance, the Corporate Average Fuel Economy (CAFE) standards in the US are urging automotive OEMs to decrease automobile mass and, in turn, improve efficiency. Additionally, increasing iron and steel prices are expected to foster the demand for plastics in automotive. The United States government has established a greenhouse gas emission target for 2050, which is the most significant market driver. Established market participants in the region are concentrating on the development of electric vehicles. In 2020, General Motors joined with EVgo to promote the adoption of electric vehicles in the United States.

Europe's automobile manufacturers use high-performance plastics since these materials are energy-efficient and aid in the vehicle's weight reduction. Strict emission regulations in the region have compelled European automakers to switch from diesel engines to electric motors. This will increase product demand over the forecast period. The regulatory scenario in Europe is at par with that in North America. Countries across the region are enforcing policies to curb vehicular emissions. Under the European Minimum Energy Performance Standard (EU MEPS), all-electric motors introduced across Europe must comply with the determined minimum efficiency levels. Such regulations are spurring acquisitions in the automotive plastics market space. For instance, in 2016, Metaplasm Group, a European auto supplier, acquired Key Plastics LLC, a developer and manufacturer of thermoplastic automotive components.

Latin America and the Middle East and Africa (LAMEA) region are expected to witness steady growth, balanced by positive factors such as infrastructure development and deterrents such as limited availability of funds and low per capita income in Africa. The United Arab Emirates' initiatives to adopt eco-friendly, fuel- and cost-efficient, and "smart" vehicles are altering local fleets. Efforts by the government to include greener vehicles in public transportation fleets are incentivizing the private sector to manufacture lighter, more fuel-efficient automobiles. Moreover, government regulations, incentives, and tax rebates are likely to fuel the adoption of electric vehicles and, in turn, drive the automotive plastic market in the coming years.

Segmental Analysis

The global automotive plastics market is segmented based on product type and applications.

Based on product type, the market is segmented into polypropylene, polyurethane, polyvinyl chloride, acrylonitrile butadiene styrene, and others.

The polypropylene segment holds the largest market share at present, followed by polyamide, owing to the low cost of polypropylene and its high mechanical performance, including resistance to different chemical solvents, bases, and acids. Additionally, polypropylene is used in automotive bumpers, cable insulation, chemical tanks, gas cans, and carpet fibers. Propylene is relatively lightweight compared to other plastics, making it appropriate for use in the automotive industry to reduce the overall weight of cars, which in turn reduces fuel consumption and greenhouse gas emissions.

The polyamide segment is also expected to witness considerable growth, owing to the high usage of this polymer in airbag containers, engine covers, and different electronic components in passenger cars.

Based on applications, automotive plastics can be classified as interior, exterior, and under the bonnet.

The interior segment is expected to witness significant growth as around 50% of automotive interior parts are made of plastics, including door panels and instrumental panels, as plastics provide a good surface finish, aesthetic appeal, and scratch resistance.

Recent Developments

• June 2022- Covestro inaugurated two polycarbonate compounding production lines at its India facility in Greater Noida, close to New Delhi. The purpose of the new factories is to address the rising demand for compounded polymers, especially in the automotive and electrical, and electronics industries.
• October 2022- Borealis announced the development of its unique Borstar Nextension technology, a performance breakthrough for polypropylene (PP). The combination of Borstar and the patented Borstar Nextension catalysts generate a broader selection of custom polyolefins. In multilayer applications, this innovative technology allows for substituting numerous different materials with a single substance, hence facilitating recycling.
• June 2022- Magna, an automotive supplier, has introduced lighting components that can be integrated into car body panels. Exterior lighting is becoming an increasingly important aesthetic differentiator while also enhancing safety through increased visibility. Magna's new Lighting solution featured on the thermoplastic liftgate combines the company's expertise in exteriors and lighting and gives additional personalization options. Magna announced that the technology will be ready for production by 2023.