Global Automotive Drivetrain Market Size & Growth Trends Analysis Report

The growth and evolution of the automotive drivetrain market are shaped by multiple critical variables. An important motivator is the growing need for fuel economy. Both buyers and automakers are looking for cars with higher fuel economy and lower emissions as environmental concerns and regulatory constraints grow. The advances in drivetrain technologies, including the use of lighter materials and more effective transmission systems, are the result of this need in the automotive market. In addition, the market is being greatly impacted by the electric cars (EVs) explosive expansion. With automakers putting increasing emphasis on EV production, electric drivetrains which are essentially different from those used in internal combustion engine (ICE) vehicles are becoming more prevalent. By improving vehicle performance and safety, technological developments particularly in all-wheel-drive (AWD) and four-wheel-drive (4WD) systems are also propelling the market. Moreover, the rising disposable income and urbanization in regions like Asia-Pacific are driving up demand for modern drivetrain systems, which is being bolstered by the constant increase in global automotive production, particularly in emerging countries.

Regulatory agencies such as the European Commission (EU) in Europe and the National Highway Traffic Safety Administration (NHTSA) in the U.S. are crucial in guaranteeing environmental compliance and safety in the automotive drivetrain sector. The vehicle safety performance standards are defined by the NHTSA, while drivetrain design is impacted by the European Commission's enforcement of stringent emissions regulations. The drivetrain technology is being driven by advancements in car emissions regulations enforced by the Environmental Protection Agency (EPA) in the U.S.. Furthermore, the global standards from the International Organization for Standardization (ISO) guarantee quality and compatibility in markets, which has an impact on drivetrain system development globally.

The global automotive drivetrain market is constrained by several factors. One major obstacle may be the expensive expense of creating and implementing cutting-edge drivetrain technology, like electric and hybrid systems. Both manufacturers and consumers are impacted by this financial burden, especially in marketplaces where prices are crucial. The intricacy of electric drivetrain systems also poses difficulties. The design, production, and maintenance of these systems necessitate a high level of skill, which may impede their adoption, particularly in areas with inadequate technological infrastructure. These interruptions have made it more difficult to produce modern drivetrains, especially in the supply of essential parts like semiconductors. Additionally, the expenses of adhering to regulations, especially those about safety and emissions norms, put further financial strain on automakers, which may inhibit innovation as businesses put completing legal obligations ahead of creating new technology.

Notwithstanding these obstacles, there are a lot of opportunities in the automotive drivetrain sector, especially concerning the growth of hybrid and electric drivetrains. The drivetrains specifically designed to accommodate hybrid and electric vehicles are in high demand as global attention turns to lowering carbon footprints. Businesses that can develop in this area stand to gain a lot as they take advantage of the growing consumer demand for automobile technology that is more efficient and clean. Drivetrain system improvements are in an exciting period as new growth opportunities are presented by the move towards sustainable transportation. 

Impact of COVID-19

The automotive drivetrain market was severely impacted by the COVID-19 pandemic. As a result of manufacturing closures, supply chain disruptions, and a fall in consumer demand, there was initially a steep decline in vehicle production and sales. But the industry swiftly adjusted, with an even faster move to electric cars propelled by a growing consciousness of environmental issues and the demand for sustainable solutions. The drivetrain market was eventually positioned for a more sustainable future post-pandemic owing to this shift, which sparked innovation in electric drivetrains and sophisticated systems like all-wheel-drive (AWD) and four-wheel-drive (FWD), which gained appeal for their better performance and safety features.

Segmentation

The global automotive drivetrain market is segmented based on vehicle type, propulsion type, and drive type. By vehicle type, the market is further segmented into passenger vehicle, and commercial vehicle. Automakers such as Ford, Volkswagen, and General Motors place a high priority on passenger cars, which are known for their comfort and fuel efficiency. Companies like Volvo and Daimler dominate the commercial vehicle market, specialising in trucks, buses, and other heavy-duty vehicles with an emphasis on power and durability.

By propulsion type, the market is further bifurcated into internal combustion engine (ICE), and electric vehicles. Internal combustion engines, or ICEs, are the foundation of conventional drivetrains, and manufacturers such as Toyota and Honda continue to be major players in this market. Hybrid drivetrains, which combine internal combustion engine (ICE) and electric power, are supported by automakers such as Honda (Insight) and Toyota (Prius). Leading innovators in the electric vehicle market, such as Tesla and Nissan, are pushing the limits of efficiency and performance in the electric drivetrain category, which is solely focused on electric propulsion. The market for electric vehicles, or EVs, is expanding quickly, led by businesses like Rivian and Tesla. These producers focus on efficiency and range while designing drivetrains, especially for electric propulsion.

Based on drive type, the market is segmented into all-wheel drive(AWD), front-wheel drive(FWD), and rear-wheel drive (RWD). Known for their ability to improve traction and stability on a variety of surfaces, All-Wheel Drive (AWD) systems are a common feature on cars made by manufacturers such as Audi and Subaru. Front-wheel drive (FWD) is a popular feature of passenger automobiles made by Toyota and Honda. It is praised for its affordability and fuel economy. Due to their emphasis on improved handling and power distribution, BMW and Mercedes-Benz lead this market category. Rear-wheel drive (RWD) is generally associated with sports and luxury vehicles. Additionally, a crucial component of automobiles from manufacturers like Jeep and Land Rover are Four-Wheel Drive (FWD) systems, which are necessary for off-road and heavy-duty vehicles.

Companies like ZF Friedrichshafen and Aisin Seiki specialize in both automatic and manual transmissions for a variety of drivetrain systems, making them an essential component. Leaders in the industry like Eaton and Dana make differentials, which are essential for transmitting power to the wheels. Manufacturers like BorgWarner and Magna International specialise in transfer cases, which are necessary for FWD and AWD cars. Additionally, businesses like GKN Driveline and NTN Corporation create drive shafts, which transfer torque from the transmission to the differential.

Regional Analysis

The robust demand for SUVs, trucks, and electric cars in the region propels the North American automotive drivetrain industry. Major players in this industry include the U.S. and Canada, where Ford, General Motors, and Tesla are among the leading automakers. The region's emphasis on cutting-edge technology and fuel economy has resulted in a rise in the use of electric and all-wheel drive (AWD) vehicles. Further boosting market expansion in North America are stricter pollution rules that are forcing manufacturers to innovate and use more efficient drivetrain technologies.

Due to the presence of significant vehicle manufacturers, Germany leads the geographical market of Europe, which places it in second place overall. Rear-wheel drive (RWD) and electric drivetrains are among the cutting-edge drivetrain technologies that are being adopted in the region due to the increasing demand for luxury automobiles and electric cars. Leading automakers are leading the way in incorporating state-of-the-art drivetrain technologies, including Mercedes-Benz, BMW, and Volkswagen. The region's transition to hybrid and electric drivetrains has also been pushed by the strict environmental restrictions of the European Union and the goal to reduce carbon emissions.

The Asia Pacific region is expected to grow at the quickest CAGR in the upcoming years. The enormous automotive industries in nations like China, Japan, and India are the main drivers of this growth. The market is expanding owing to the region's rapid urbanization, expanding disposable income, and rising demand for passenger cars. The manufacturing and uptake of electric drivetrains have increased significantly in China as a result of the government's vigorous promotion of electric vehicles (EVs). Renowned for their inventiveness in car technology, Japanese manufacturers persist in creating sophisticated drivetrain systems, encompassing hybrid and all-wheel drive (AWD) innovations.

Latin America's automobile drivetrain market is expanding gradually, led by nations like Brazil. One of the main factors driving market expansion in the region is the demand for SUVs and commercial vehicles, which frequently call for powerful powertrain systems like all-wheel drive (AWD). Even while the market for electric cars is still in its infancy, interest in them is growing, especially in the region's more industrialized economies. Although there are obstacles due to the economic instability in some Latin American countries, the general trend of modernizing the fleet of vehicles encourages the use of innovative drivetrain technologies.

The market for vehicle drivetrains is smaller but is expanding steadily in the Middle East and Africa region. The region's penchant for high-performance automobiles, such as luxury cars and off-road vehicles, which call for potent powertrain systems like all-wheel drive (AWD) and four-wheel drive (4WD), is a major factor driving demand. Notable markets in the region are South Africa and the United Arab Emirates. In many regions of Africa, growing urbanization and rising disposable incomes are also fueling the market for passenger cars, particularly those with more sophisticated drivetrain systems. Nonetheless, conventional drivetrain systems continue to dominate the market, and the adoption of electric drivetrains is still quite low.

Competitive Analysis

The key players in the global automotive drivetrain market are Borgwarner Inc. (U.S.), Aisin Seki Co. Ltd. (Japan), American Axle & Manufacturing Inc. (U.S.), Melrose Industries PLC (U.K.), ZF Friedrichshafen AG (Germany), Magna International Inc. (Canada), Dana Limited (U.S.), JTEKT Corporation (Japan), Showa Corporation (Japan), Schaeffler AG (Germany), among others.

Drivetek, a business that provides system engineering services and power electronic manufacturing, was bought by BorgWarner in December 2022. The portfolio of BorgWarner is expanded by this acquisition, which comes after the company made some strategic purchases in 2022, including Apache Friends in February and Rhombus Energy Solutions in August. These acquisitions aim to enhance BorgWarner's expertise in cutting-edge technologies and energy solutions.

Similarly, Neumayer Tekfor, a Hausach-based, 1942-founded automotive component maker and supplier, was bought by American Axle & Manufacturing in April 2022. The purchase price was USD 136 Million. American Axle & Manufacturing made this strategic acquisition to broaden its product line and increase its market share in the automotive components industry.

In 2023, ZF purchased Berlin-based Intellic Group, a 1998-founded producer of digital tachographs, in January 2023. This acquisition fits perfectly with ZF's plan to improve its fleet management and digital technology capabilities. ZF's position in the commercial vehicle market is strengthened by the addition of Intellic Group, especially in the areas of fleet monitoring and regulatory compliance.

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The global automotive drivetrain market is segmented as follows:

By Vehicle Type (Revenue: USD Billion, 2018 – 2030)
●    Passenger Vehicle
●    Commercial Vehicle

By Propulsion Type (Revenue: USD Billion, 2018 – 2030)
●    Internal Combustion Engine (ICE)
●    Electric Vehicles

By Drive Type (Revenue: USD Billion, 2018 – 2030)
●    All-Wheel Drive (AWD)
●    Front-Wheel Drive (FWD)
●    Rear-Wheel Drive (RWD)

By Region (Revenue: USD Billion, 2018 – 2030)

● North America
o U.S.
o Canada
o Mexico

● Europe
o U.K.
o France
o Germany
o Italy
o Spain
o Rest of Europe
 
● Asia Pacific
o China
o Japan
o India
o South Korea
o South East Asia
o Rest of Asia Pacific

● Latin America
o Brazil
o Argentina
o Rest of Latin America

● Middle East & Africa
o GCC Countries
o South Africa
o Rest of Middle East & Africa