Automotive transmission gears Market for Automotive Transmission Gears Estimated to Witness High Growth Owing to Rising Automotive Production and Growing Demand for Fuel-Efficient Vehicles
The automotive transmission gears market is estimated to be valued at US$ 38.95 billion in 2024 and with a CAGR of 6.7% over the forecast period 2024-2031. The demand for automotive transmission gears is expected to rise significantly owing to increasing automotive production around the world. Furthermore, strict emission norms and growing demand for fuel-efficient vehicles are also augmenting the market growth.
Market Dynamics:
Rising automotive production: Growing middle-class population and increasing disposable incomes in developing countries have boosted the sales of passenger and commercial vehicles. This is propelling the demand for automotive transmission gears from OEMs. According to OICA, global passenger car production reached over 73 million units in 2021 registering a year-on-year growth of 4%.
Growing demand for fuel-efficient vehicles: Stringent emission norms and rising fuel prices are compelling automakers to focus on manufacturing fuel-efficient vehicles. This is fostering the adoption of advanced transmission systems such as automated manual transmission and continuous variable transmission, which in turn is driving the automotive transmission gears market. Government initiatives promoting electric mobility are also contributing to the market growth.
Market Drivers: Growing Demand for Fuel Efficient Vehicles is Driving the Market
One of the major drivers for the automotive transmission gears market is the growing demand for fuel-efficient vehicles across the world. With rising fuel costs and stricter emission norms, automakers are focusing on developing vehicles with improved fuel economy. Transmission gears play a crucial role in improving the fuel efficiency of vehicles. Newer technologies like automatic transmissions and continuously variable transmissions (CVTs) help in delivering better mileage than conventional manual transmissions. They allow the engine to operate in its optimal rpm range. This reduces wastage of fuel and lowers the vehicle's carbon footprint. The shift towards hybrid and electric vehicles is also augmenting the demand for advanced transmission systems with lower power losses. OEMs are investing heavily in R&D to create lightweight yet high strength gears that enhance the performance and efficiency of new age powertrains.
Market Drivers: Growing Vehicle Production and Sales is augmenting Market Growth
Another key driver for this market is the steady rise in global vehicle production and sales over the past few years. Developing economies in Asia Pacific and Latin America are witnessing high sales growth, attributed to rising incomes, development of road infrastructure and easy availability of financing options. This is translating into increased demand for transmission components from automakers. According to various industry estimates, over 100 million vehicles are produced annually worldwide. Even mature automotive markets like North America and Europe are reporting healthy sales, driven by replacement demand and preference for SUVs/crossovers over sedans. All these factors ensure a steady requirement for transmission gears from the OEM sector. Manufacturers are ramping up their facilities and product portfolios to capitalize on the market opportunities.
Market Restraints: Price Volatility of Steel Restrains Market Growth
One of the major challenges faced by this market is the price volatility of steel, which is the primary raw material used in manufacturing transmission gears. Fluctuations in steel prices have a direct impact on the production costs and profit margins of gear manufacturers. Steel accounts for over 50% of total raw material costs. International steel prices are dependent on various global economic and political factors beyond the control of stakeholders. Periods of high steel costs reduce the competitiveness of domestic producers against low-cost imports. It also constrains companies' ability to pass on increased costs to OEMs via price hikes. This can negatively impact their long term investment decisions and profitability. Gear makers consistently strive to reduce reliance on steel through innovations like additive manufacturing and use of alternative materials.
Market Restraints: Stringent Fuel Efficiency Standards Increase Cost of Compliance
Governments worldwide are continually strengthening fuel economy and emission regulations to curb environmental pollution. While it promotes the adoption of green technologies, it increases the R&D burden and costs for automakers. They are compelled to make heavy investments in product upgrades, testing and certification procedures to certify compliance on schedule. Especially for global players, managing diverse technical specifications across regions ads to design complexities. Additional costs are then transferred to component suppliers via price pressure. This acts as a restraint while gear manufacturers strive to cut prices and maintain competitive quoting to grab bigger business shares. Significant investments in advanced research facilities and engineering talent are required to match the evolving standards, posing financial challenges for small-scale players.
Market Opportunities: Growing EV Adoption Opens New Revenue Avenues
One major market opportunity for gear manufacturers lies in catering to the rising electric vehicle (EV) industry. While EVs do away with the conventional gearbox, they still utilize a range of transmission components in applications such as drivetrain disconnects, two-speed transmissions and gear reducers for power distribution mechanisms. Leading players are developing new product lines focusing on lightweight gears optimized for EV powertrains with lower noise and vibration attributes. The global EV sales figures are expected to multiply in the coming years on the back of supportive government policies and expanding charging infrastructure. This will fuel requirements for innovative transmission solutions from automakers and component suppliers alike to tap into this fast-growing vertical.
Market Opportunities: Growth in Aftermarket Repairs and Replacement Boosts Opportunities
The strong and steady aftermarket demand for transmission spares presents another revenue enhancing avenue. With millions of vehicles plying worldwide and average age of vehicles rising in emerging nations, aftermarket needs will sustain regardless of short-term economic fluctuations. Problems like gear wear and failures necessitate frequent replacements. Third party workshops also create good demand. This provides a relatively stable revenue stream for gear brands through their distribution channels even during industry downturns. They is enhancing aftersales support and developing Reman transmission solutions with reconditioned components to address this expanding segment.
Link: https://www.coherentmarketinsights.com/market-insight/automotive-transmission-gears-market-4992
Key Developments:
- In 2021, BorgWarner teamed up with Chinese automaker Great Wall Motors to supply its advanced dual-clutch transmission (DCT) technology.
- In 2021, Magna introduced a new e-drive system for hybrid and electric vehicles, featuring an integrated transmission system.
- In June 2021, JATCO Ltd introduced a new continuously variable transmission (CVT) called the "Jatco CVT-X" (JF022E) for medium to large front-wheel-drive (FWD) vehicles. This transmission aims to improve environmental performance and drivability.
- In August 2021, NORD launched flexible drive solutions designed for various industrial applications, including bucket elevators, screw, drag, and belt conveyors. These solutions are engineered to handle high loads, with power capacities reaching up to 8000 HP and a gear ratio range from 6 to 1600:1.
Key Players:
GKN plc , American Axle & Manufacturing, Inc. , Robert Bosch GmbH , ZF Friedrichshafen AG , Magna International Inc. , Aisin Seiki Co., Ltd. , Showa Corporation , Dana Incorporated , JTEKT Corporation , BorgWarner Inc. , Schaeffler AG , Linamar Corporation, Eaton Corporation plc , Hyundai WIA Corporation , NSK Ltd. , Bharat Gears Ltd. , Univance Corporation , Continental AG , Neapco Holdings LLC , Ricardo plc
