The spark plug has played a crucial role in an engine cylinder. It is a device that is used to ignite the compressed air-fuel mixture of gasoline. The spark plug is used in two-stroke, four-stroke petrol engines in automobile and marine industries. Spark plugs are also used in stationary applications such as gas-fired power plants.
The automobile industry is set to move on to its alignment phase after enduring the shutdown and restart phase. Some countries have already started administering vaccines while some of them are undergoing phase 3 trials; the automobile industry is expected to rekindle itself. Car manufacturers are expected to complete inventory correction by restocking production till 2021. The market is expected to back on track after production. A considerable share of car production is concentrated in Europe, China, and North America. China is leading the line and has already reached sales of 2.57 million in Sept 2020, according to the China Association of Automobile Manufacturers (CAAM).
Due to oil price volatility, the difference between diesel prices and gasoline prices has reduced considerably over the years. It has made consumers shift to gasoline cars. Stringent government norms and regulations regarding emissions have made it difficult for automobile manufacturers to maintain fuel efficiency.
Over the past few years, the automotive industry witnessed tremendous growth in the emerging economies owing to the rapid development and increased investments in the regions. The emerging economies, including Asia-Pacific, Latin America, and Southeast Asia, experienced a high influx of OEMs investments to reduce production costs.
The geographic diversification of the automakers has created a new manufacturing hub in the emerging markets. The expanding automobile industry, notably in China, Brazil, and India, opens potential avenues for the turbocharger market. The Thailand Automotive After sales Industry underlined that there will be over 18 million passenger cars in Thailand by 2020, thus presenting an attractive opportunity for the spark plug market in the automotive aftermarket arena.
The rise in the urban population and increased consumer incomes are driving passenger vehicles' demand. Additionally, the easy credit facilities and the increased mobility needs have led to a rise in passenger vehicle sales in these emerging markets.
Around 25 million cars were sold in 2018 in India, and the number rose to 26.3 million K Units in 2019, as per the statistics published by the IBEF. The growing middle-class population and changing demographics to millennials are resulting in the strong growth of the passenger cars market, which is anticipated to fuel turbochargers' demand. The China Association of Automobile Manufacturers (CAAM) estimates a rise of 11.1% Y-O-Y growth in passenger cars' retail sales in 2021, with the sales volume reaching 2.14 million K Units. According to recent data published by the International Organization of Motor Vehicle Manufacturers (OICA), production figures are expected to be back on track in the first half of 2021.
Even though the pandemic has adversely impacted the market, the after-market scenario remains resilient. Factors such as lockdown, supply chain disruptions, and a cautious demand outlook have caused car manufacturers to restructure their future plans. However, consumers have been using less public transport and are focusing on repairs and maintenance of current and second-hand vehicles creating a lucrative case for the after-market segment in the spark plug market.
Also, spark plug manufacturers consider this as an opportunity and have been introducing high-performance spark plugs more powerful than OEM spark plugs to gain traction.
As discussed earlier, the pandemic has made the automotive world to change its plans, especially when it comes to Electric Vehicle (EV). It is expected that the EV market is going to make a faster rebound as compared to fuel-powered vehicles post COVID-19. This is likely to impact the spark plug market as Electric Vehicles do not require spark plugs to function. It is not yet certain how quickly consumers adapt to this transition which is a significant factor in the growth of the global spark plug market.
The outlook for the spark plug market in other applications like marine and power plants remains promising. Power plants that run on natural gas have engines that require spark plugs for efficient fuel combustion. The U.S. and Europe have already started reducing their dependency on coal-fired power plants and transitioning to gas-fired power plants. According to the International Energy Agency (IEA), gas-fired generation expanded by 3% in 2019 and is expected to return to its pre-COVID-19 level in late 2021. Many countries are adopting gas-fired generation as it helps to complete their Sustainable Development Scenario (SDS) in the long term.
Concerning marine applications, the spark plug market outlook looks promising. The International Maritime Organization (IMO) regulations to cut down sulfur emissions have made shipbuilders focus more on gasoline-powered engines and move away from diesel-powered engines. Moreover, small boats including fishing boats, ferries, patrolling, and speed boats are mostly fitted with gasoline-powered engines paving the way for an increase in the demand for spark plugs. Australia and New Zealand focus on the development of the spark plug market in marine applications.
It is also important to note the use of spark plugs in other applications such as brush cutters, scythes, mowers, and saws. These working equipment are usually installed with two-stroke petrol engines that require spark plugs.
Though the advent of Electric Vehicle may create doom for the spark plug market, newer avenues have arrived in marine applications. As discussed earlier, the International Maritime Organization (IMO) regulations for sulfur emissions have made a case for alternative fuels like CNG, LPG, and LNG powered ships. LPG has a high octane number that makes it suitable for spark-ignition engines. These alternative fuels can, not only be used in merchant's vessels but also, in recreational boats and fishing boats.
Many countries are shifting their dependency from oil due to environmental concerns and also focusing on sustainable development. Alternative fuels create a viable option for this. Governments are also emphasizing on CNG-powered public transport vehicles, which open great opportunities for the spark plug market, especially in the emerging economies of India, Brazil, and South Africa.
Ngk Spark Plug Co., Ltd., Federal-Mogul Corporation, Denso Corporation, Robert Bosch GMBH, Autolite, Enerpulse Technologie, Stitt Spark Plug, Acdelco, E3 Sparkplugs, Zhuzhou Torch Spark Plug, and Tenneco Inc.