The market for Transfer Case is forecast to reach $24.8 billion by 2025, growing at a CAGR of 8.75% from 2020 to 2025. Rising effort by automotive manufacturers to enhance fuel-efficiency, the growing need of low range gears and chain drive, and increased demand for electric and hybrid vehicles are expected to accelerate the Transfer Case Market during the forecast period. The implementation of the stringent government regulations owing to the pollution standards is further set to escalate the market growth rate.
Asia-Pacific dominates the Transfer Case industry owing to rising production of automobiles and stringent regulatory norm on reducing environmental footprints and energy consumption.
Increasing demand for electric and hybrid vehicles and the ban on diesel and gasoline vehicles is expected to create favourable market for transfer case in passenger vehicle segment.
Increasing adoption of sustainable and environment-friendly automotive components and implementation of stringent government regulations related to automobile emissions will increase the market demand for transfer case during forecast period.
Type – Segment Analysis
Electronics shift on the fly transfer case is likely to register faster growth due to rising deployment of advanced electrification technology in modern automobiles. The growing adoption of electric and hybrid vehicles and rising demand for safety and comfort in modern automobiles will be the key driving factors for electronics shift on the fly transfer case. With a 16-bit/ 32-bit CAN-enabled Electronic Control Unit (ECU), the electronics shift on the fly is considered to be an efficient mechanism is select between two-wheel-drive and four-wheel drive along with choosing various gear driven ranges. This technology also offer enhanced traction and stability as compared to its manual shift on the fly counter parts. The increased demand for luxury cars in developing countries such as India will create an opportunity for electronics shift on the fly transfer case. In 2018, BMW and Mercedes sold approximately 11,000 and 15,538 luxury cars exhibiting a year on year growth of approximately 13% and 2% respectively in India.
Vehicle Type – Segment Analysis
Passenger vehicle is the largest segment for automotive transfer case. The growing demand for luxury passenger cars, rising popularity of electric and hybrid passenger vehicles are the key driving factors for transfer case market. As stated by OICA, number of passenger cars accounted for 67,149,196units whereas the commercial vehicles accounted for 24,637,665. Adding to this, the growing production plants for passenger cars is also set to escalate the market growth rate. In January 2020, Toyota has announced to invest $700M in the expansion of its production plant in US. In September 2019, Toyota Motor Corporation has announced to expand its facility in Brazil with an investment of $190M to increase the production. Adding to this, the sale of Electric Vehicle worldwide increased by 64% between 2017 and 2018 and reached approximately 2.1 million units in 2018 as stated by International Energy Agency. Transfer case being widely used in electric and hybrid vehicle is likely to find enormous demand during this period.
Geography – Segment Analysis
In 2018, APAC dominated the transfer case market, followed by North America and Europe. The economy of APAC is majorly influenced by the major countries such as China and India. In these countries, the government are aggressively implementing regulatory framework to reduce the environmental footprint and fuel consumption in automobiles. According to new CAFE regulations introduced in India, the corporate average fuel consumption for each automaker are expected to be brought down to 113 CO2 gm/km by 2022 compared to the 129.8 CO2 gm/km in 2017. Stringent regulations as such will drive the usage of transfer case market in this region. Similarly, China is continuously creating opportunity for transfer case market with the increased sales of automobiles in this region. In 2019, The U.S. Department of Transportation (DoT) and EPA proposed to amend the existing Corporate Average Fuel Economy (CAFE) standards to improve the safety and fuel economy of automobiles. This new amendment is likely to bring stricter regulation for automotive OEMs to minimize societal costs and reduce highway fatalities. Such regulations are likely to increase the demand for drivetrain electrification, thereby accelerating the demand for transfer case.
Drivers –Transfer Case Market
Growing demand for 6*2 axle configuration in heavy duty trucks and commercial vehicles
6×2 axle configuration in heavy duty trucks and other commercial vehicles are garnering new attention as the end users are looking for optimizing performance. Trucks fitted with the new generation 6×2 axle configuration can carry the same amount of load with approximately 3%-4% lesser fuel consumption as compared to their 6×4 counterparts. Therefore, an increase in the sale of 6×2 commercial trucks will drive the demand for transfer cases which will fuel the automotive transfer case market during the forecast period. The medium-duty and heavy-duty trucks grew by 4.5% worldwide during 2017-18. The countries like India, Brazil and Indonesia witnessed double digit growth in sales during this time. Similarly, in Europe and China there is a strong regulatory pressure to lower down the emissions in Heavy duty and light trucks. This is likely to create new opportunity for truck with 6*2 axle configuration, thereby creating demand for transfer case market.
Implementation of Stringent Environment and fuel efficiency Regulations
The demanding requirement from consumers and regulatory bodies are bringing disruption in the automotive industry, with new technological innovations. At present, the automotive industry is focusing on reducing the weight of vehicles, while achieving significant fuel efficiency and reducing emission. In recent time, with these emerging requirement, transfer case have become a vital component in the automobile industry. In 2018, Magna introduced a 48V, 4 wheel drive shafts system transfer case which reduce CO2 emission by 10% and offer better fuel efficiency as compared to 2 Wheel drive system.
Challenges – Transfer Case Market
Sharp Drop In the sales and passenger car production:
The production of passenger cars are witnessing sluggish growth since 2016 owing to economy slow down and various government financial reformation activities worldwide. The rise in the Federal Reserve Interest rate has slowed down the sales of vehicles in the U.S. Since 2016. The production has also been declining during this period. As stated by OICA, the passenger car production has reduced by 2% in 2019. Adding to this, the spread of global pandemic COVID-19 has significantly impacted on the production of the vehicles since March 2020.
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Transfer case market. Transmission repair driver market is expected to be dominated by major companies such as AISIN SEIKI, American Axle & Manufacturing, BorgWarner, Magna International, and ZF Friedrichshafen among others.
In June 2018, Magna Expanded its electric products portfolio with advanced 48 Volt Transfer Case.