Automotive composites market outlook
Across the globe, light vehicles consume roughly 5 billion pounds of composites on an annual basis. Thermoplastic matrix composites account for a majority of the volume. Composites and other lightweight materials have enjoyed strong growth in the recent past, but the year ahead brings some headwinds for composites in automotive applications. The primary growth inhibitors will be a relatively flat market for light vehicles globally and a relaxation of fuel economy standards in the United States. However, opportunities for growth will exist as OEMs continue to reduce vehicle weight on global vehicle platforms.
Suppliers of automotive materials will need to gain market share to grow in 2020 because very little year-over-year production growth is expected. Europe is forecast to be flat, and a slight decline is anticipated in NAFTA as well. China is expecting low single-digit growth, which is very modest when compared to the phenomenal annual growth observed in the recent past. Since the global production outlook is 2-3% per year through 2025, suppliers of composites will need to earn market share from incumbent materials in order to find meaningful growth.
In addition to general market sluggishness, relaxation of corporate average fuel economy standards in the United states will contribute to headwinds. Weight reduction has been part of the OEM strategy to meet steadily increasing fuel economy and carbon dioxide emission regulations. These regulations have been the primary driver of the increased adoption of lightweight materials in automobiles over the past decade. With the United States proposing to hold fuel economy regulations flat through 2026, OEMs will have less incentive to invest in weight-saving materials such as composites. This is particularly true for pickup trucks and large SUVs that are sold primarily in the United States. Suppliers of composites and other lightweight materials should expect less interest on US-specific platforms given the current regulatory environment.
Rollbacks of fuel economy standards in the US are only a minor setback to the adoption of lightweight materials on automobiles globally. More stringent regulation of carbon dioxide emissions outside of the US will continue to drive the need for vehicle weight reduction on global vehicle platforms. Furthermore, weight reduction is critical to extend the range of battery-electric vehicles, and the pursuit of lightweight materials will continue for this small, but growing, segment. Interest in composites for vehicle weight reduction will persist despite the “pause” on US fuel economy regulations.
In order to capitalize on this interest, composite part suppliers will have to sharpen their value proposition versus alternative offerings. High strength steel and aluminum have been the biggest beneficiaries of OEM weight reduction efforts in North America over the past the last decade, gaining 6% and 3% of vehicle mass, respectively. This share has been taken primarily from mild steel, which is the baseline automotive grade steel from the standpoint of cost, manufacturability, and strength-to-weight ratio. Normalizing the data and accounting for differences in specific gravity shows that the volume of high strength steel and aluminum outgrew plastics and composite resins by factors of roughly 2 and 3, respectively, over this time period. Clearly, there is more work to be done if composites are to become the preferred option in mainstream automotive weight-reduction efforts.
Source: American Chemistry Council, Industrial Market Insight
Source: American Chemistry Council, Industrial Market Insight
The near-term future will bring both challenges and opportunities for composites in automotive applications. Headwinds, including a relatively flat global production outlook and a decline in regulatory drivers for lightweight materials in North America will present obstacles to growth. There will be continued demand for lightweight automotive materials, and suppliers of composite materials that can demonstrate cost-effective performance versus aluminum and other alternatives can position themselves to win new applications in a difficult environment.
Marc Benevento
President
Industrial Market Insight
www.industrial-market-insight.com
mbenevento@industrial-market-insight.com