New analysis from researchers at Frost & Sullivan finds that the All Wheel Drive (AWD) market – comprising of part-time, full-time, on-demand, combination, and electric AWD (eAWD) systems – earned revenue of US$11.66bn in 2013 and is forecast to reach US$14.98 billion in 2020.
F&S said that the growing demand for vehicle stability, safety, and enhanced driving dynamics is fuelling the adoption of (AWD) systems, particularly among the C- and D-segments of the vehicle market.
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AWD systems enable the secondary axles to engage before slippage occurs and ensure the active distribution of torque between axles when turning corners, thus lending the vehicle optimal power and stability on the road. On-demand AWD also improves fuel-efficiency allowing vehicle original equipment manufacturers (OEMs) to counter the impact of soaring fuel prices on market growth.
“The Detroit-3 OEMs currently dominate the AWD market, followed by Asian and German OEMs – who respectively hold 35 percent and 10 percent of the revenue potential,” said Frost & Sullivan Automotive & Transportation Research Analyst Vikram Chandrasekar. “The Detroit-3 will continue to command the most revenue from AWD system sales and are likely to hold 50 percent of the market share through 2020.”
However, the cost of sourcing AWD systems is expected to fall by only 5 to 10 percent in the coming decade, says Frost. That would be bad news to most OEMs, as they consider the high cost of sourcing front wheel drive (FWD)-based disconnect AWD systems a major factor that is holding them back. Although the implementation of disconnects on to the transfer-case within a target cost range has been feasible, OEMs and suppliers are struggling to adopt similar cost strategies for power transfer units on FWD-based AWD systems. Manufacturers need to overcome this obstacle as FWD-based architecture will soon be used for almost all passenger vehicles in North America.
“Rightsizing the driveline and disconnect driveline systems will be critical to the future of conventional AWD technology, even though this might threaten the growth of eAWD systems and restrict their use to a limited range of hybrid vehicle models,” said Chandrasekar. “OEMs should partner with AWD system suppliers to ensure effective rightsizing of driveline components based on customer usage profiles and expand their share in the North American market.”
