Automotive All-Wheel-Drive Market Size (USD 44.29 Bn) by 2032

The automotive all-wheel-drive market was valued at USD 22.45 billion in 2023 and is expected to reach USD 44.29 billion by 2032, registering a CAGR above 6.74% during the forecast period.

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The CAGR of the four-wheel drive market is attributed to the rising concern over road safety, stemming from the increase in accidents globally. This surge in accidents, resulting in numerous fatalities, has fueled the demand for four-wheel drive systems as a safety measure. With a growing number of accidents reported, particularly on international highways, there is a projected uptick in the demand for four-wheel drive vehicles in the coming years. The popularity of these systems has been on the rise recently and is expected to continue during the forecast period.

According to the World Health Organization's Global Road Safety Status Report, over 1.24 million people lost their lives in accidents worldwide in 2010. The escalating number of accidents has prompted countries to enact traffic safety regulations, with leading regions such as the EU and US taking proactive measures in regulating vehicle safety standards. Consequently, Original Equipment Manufacturers (OEMs) are introducing vehicles equipped with safety features aimed at enhancing vehicle stability, safety, and overall drivability. The All-Wheel Drive (AWD) system enhances vehicle stability and provides better traction compared to Rear-Wheel Drive (RWD) or Front-Wheel Drive (FWD) systems, driving up the demand for four-wheel drive vehicles, especially in developed regions like Europe and North America. In contrast, developing markets such as Asia-Pacific and other parts of the world are witnessing a gradual decline in demand for non-wheel drive vehicles. Harsh winter conditions and rugged terrains are fueling the demand for four-wheel drive vehicles to minimize accidents and ensure passenger and driver safety.

Technological advancements in the global four-wheel drive market are poised to shape the industry's trajectory. Today, various technologies available in the market are transforming modern vehicles into energy-efficient, automated, and safe systems. This trend is expected to facilitate smoother operation of four-wheel drive systems throughout the forecast period. While the demand for part-time 4x4 transmission remains high, advancements in technology are positioning four-wheel drive as an indispensable feature in vehicles. For instance, advancements in traction control system technology are pivotal in enhancing vehicle performance and driving safety.

The COVID-19 pandemic adversely impacted the industry due to the temporary closure of production facilities by major OEM companies, leading to a decline in global production and sales. However, with the resurgence of the economy and the revival of global automobile production, the market is witnessing a resurgence. Although passenger car sales experienced a dip in 2021 due to the pandemic, the market is gradually recovering.

The development and enhancement of All-Wheel Drive (AWD) systems and their integration into the burgeoning electric vehicle market are significant factors expected to propel the growth of the research industry in the forecast period. For instance, in June 2022, Hyundai India announced its plans to launch the new AWD electric car Hyundai Ioniq 5 in mid-August 2022. The improved performance and cooling of AWD systems are anticipated to drive future demand for four-wheel drive vehicles, particularly in North America, Europe, and the rapidly growing luxury vehicle market in the Asia-Pacific region.

Advancements in safety, security, and management systems are among the factors poised to fuel growth in the education sector. Previously limited to high-end vehicles, these systems are now being integrated into small cars and hybrid electric vehicles, driving global demand. New entrants in the automotive industry are continuously striving to develop and enhance four-wheel drive systems to boost performance and fuel efficiency, further shaping the market landscape.

Automotive All-Wheel-Drive Market Trends

The Increasing Demand for Sports Utility Vehicles

The demand for passenger cars, particularly SUVs, has surged due to features like enhanced sportiness, handling, and traction provided by all-wheel drive (AWD) systems compared to sedans and crossovers. This trend is expected to continue between 2018 and 2022, driven by economic developments in both developed and developing countries. Currently, over 65% of SUVs on the roads worldwide are equipped with AWD powertrains.

For instance,

• In 2019, SUV sales reached a staggering 200 million units globally, with approximately 29.6 million vehicles sold worldwide in 2020 alone. The adoption of electric SUVs is also on the rise, with around 1.1 million electric SUVs sold in 2020.

Safety remains a crucial factor in the selection of passenger cars equipped with AWD powertrains, especially in regions like North America and Europe where driving performance in winter or adverse weather conditions is paramount. Moreover, the integration of four-wheel drive into electric vehicles, including hybrids, plug-in hybrids, and battery electric vehicles, comes at a higher cost but is increasingly becoming essential.

For instance,

• Tesla Inc., a leading electric car manufacturer, has transitioned from rear-wheel drive systems with two motors to four-wheel drive systems in its models, offering the latter as an option to consumers.

As the automotive industry continues to develop motor cars and hybrid electric cars, the demand for four-wheel drive systems is expected to grow steadily during the forecast period, aligning with advancements in technology and consumer preferences.

The Growing Demand for AWD in Asia-Pacific

• Compared to other regions, the Asia-Pacific region consistently leads in automobile production and sales volume. For instance, in 2021, China surpassed 21 million units in passenger car sales, emerging as the largest market in the Asia-Pacific region. Japan followed as the second-largest market with sales exceeding 3.6 million units in the same year. The demand for advanced electronic control systems has been instrumental in driving the growth of the automotive industry in the region. One such system experiencing significant growth over the past five years is all-wheel drive (AWD).
• Today, most OEM automakers are capable of offering AWD SUVs catering to a wide range of consumers in the market. For example, in March 2022, Mahindra Thar emerged as the most affordable 4x4 car in the Indian market, with prices ranging from Rs 13.17 lakh to Rs 15.53 lakh (excluding tax - ex-showroom).
• Automotive industry players are continuously striving to develop and enhance various components related to four-wheel drive systems to further improve their performance and the overall industry. For instance, in January 2020, Japanese automaker Nissan unveiled a high-power, dual-motor all-wheel drive test vehicle equipped with new technology developed by the company for the next generation of electric vehicles.

Automotive All-Wheel-Drive Industry Overview

The four-wheel drive vehicle industry is characterized by key players such as BorgWarner Corporation, Toyota Motor Corporation, Eaton Corporation, Continental AG, Haldex AG, JTEKT Corporation, Dana Corporation, Nissan Motor Co., Ltd., and Magna International Corporation. These companies are actively expanding their businesses by leveraging new technologies to gain a competitive edge over their rivals.

• In February 2022, Continental AG Tires launched its latest innovation, the ax6 hybrid, designed specifically for SUVs in the Indian market. The new Continental Cross Call AX6 all-terrain SUV tires boast exceptional durability, minimal noise levels, and reduced braking distances on slippery surfaces, according to the company.
• Also in February 2022, Nissan Motor Co., Ltd., along with Nissan Motorsports International, announced the development of the Nissan Z GT500, a new sports car based on the iconic Nissan Z model, which embodies over 50 years of automotive passion.
• In a similar vein, in February 2020, Chrysler introduced an update to its standard Pacifica model, incorporating all-wheel drive functionality. This move by Chrysler aligns with the industry trend aimed at countering the shift towards SUVs, with the addition of all-wheel drive serving as a response to consumer preferences and market demands, similar to the approach taken by Toyota.

Automotive All-Wheel-Drive Market Leader

• BorgWarner Inc.
• Toyota Motor Corporation
• JTEKT Corporation
• Nissan Motor Co. Ltd
• Continental AG
• Continental AG
• ZF Friedrichshafen AG
• Eaton Corporation PLC
• American Axle Manufacturing
• GKN PLC
• Dana Holding Corporation
• Oerlikon Inc.
• Haldex

Automotive All-Wheel-Drive Market News

• In February 2022, Santroll Electric Auto and Santroll Automotive Components announced the signing of a Transfer Agreement (ETA), through which BorgWarner will acquire Santroll's electric vehicle business, Santroll Automotive Components, along with its associated projects, for up to 1.4 billion yen. This acquisition includes a closing account of 1.1 billion yen and a potential profit of up to 300 million yen. The transaction will be primarily financed using available cash.
• In July 2021, JTEKT developed a hub unit featuring seals with minimal friction torque, designed to deliver excellent sealing performance even in extremely cold environments. These innovative products are poised to contribute significantly to the realization of a low-carbon society in Japan and globally, including in regions with icy conditions.
• Continental announced its intention to invest 25 million euros (equivalent to over 160 million Brazilian reals) in February 2022 to expand its production capacity in Brazil. This move comes in response to Continental's sustained growth in the South American market. The new plant and machinery are scheduled to commence operations in early 2024.

Automotive All-Wheel-Drive Industry Segmentation

A four-wheel drive vehicle is equipped with a powertrain capable of supplying power to all four wheels, either continuously or as needed. The typical configuration for four-wheel drive is the 4x4 setup, which consists of two axles capable of distributing power to all four wheels.

Market Segmentation

By Vehicle Type

• Passenger Cars
• Commercial Vehicles

By Propulsion Type

• ICE Vehicle
• Electric Vehicle

By System Type

• Manual AWD
• Automatic AWD

By Geography

• North America
  
  • United States
  • Canada
  • Rest of North America
• Europe
  
  • Germany
  • United Kingdom
  • France
  • Rest of Europe
• Asia Pacific
  
  • India
  • China
  • Japan
  • South Korea
  • Rest of Asia-Pacific
• Latin America
  
  • Brazil
  • Rest of Latin America
• Middle East and Africa
  
  • South Africa 
  • Rest of Middle East and Africa