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Automotive Differential Market Size By Differential Type (Open Differential, Limited-Slip Differential, Electronic Limited-Slip Differential, Locking Differential, Torque Differential), By Vehicle Type (Passenger, Commercial), Drive Type, Propulsion & Forecast, 2023 – 2032

  • Report ID: GMI5862
  • Published Date: May 2023
  • Report Format: PDF

Automotive Differential Market Size

Automotive Differential Market size surpassed USD 22 billion in 2022 and is anticipated to grow at a CAGR of 4% from 2023 to 2032 attributed to the rising demand for commercial vehicles and heavy-duty trucks due to urbanization, increased logistics & transportation activities, and the improving economic conditions of developing nations.

Automotive Differential Market

The implementation of automotive differentials in these vehicles will enhance fleet efficiency. Automotive differentials facilitate precise torque control and power distribution to individual wheels, optimizing traction and enhancing vehicle stability. This, in turn, improves fuel efficiency, reduces maintenance costs, and increases overall productivity for commercial fleet operators. Such benefits are expected to boost the demand for automotive differentials in commercial vehicles over the forecast period.

The safety of commercial vehicles is of utmost importance to fleet operators. Automotive differentials, when integrated with Advanced Driver Assistance Systems (ADAS), contribute to improved safety features. They facilitate functions such as Anti-lock Braking Systems (ABS), Electronic Stability Control (ESC), and Traction Control Systems (TCS), ensuring better vehicle stability and lowering the risks of accidents. The demand for commercial vehicles equipped with these safety features will drive the automotive differential market growth.

The rising production of electric vehicles and vehicles with in-wheel electric motors is likely to restrain the industry development. Vehicles equipped with in-wheel electric motors offer an alternative propulsion system compared to traditional vehicles with internal combustion engines and separate differentials. In-wheel motors eliminate the need for a central differential altogether as each wheel has its own motor that transmits torque straight to the wheels without using any differential. This means that automotive differentials designed to optimize torque distribution between wheels may not be required in vehicles with in-wheel electric motors.

COVID-19 Impact

The COVID-19 pandemic has had both positive and negative impacts on the automotive differential market. It disrupted supply chains, manufacturing, and vehicle production, leading to delays in the development and deployment of autonomous technologies. The crisis also highlighted the importance of autonomous and contactless technologies, driving increased interest and investments in autonomous driving solutions. The long-term impacts of COVID-19 on the industry will depend on factors such as recovery of the automotive industry and continued advancements in autonomous technology.

Automotive Differential Market Trends

Vehicle makers and enthusiasts are focusing on driver comfort and pleasure while putting vehicle performance and handling qualities as a priority. Automotive differentials enhance traction control, cornering capability, and stability, resulting in higher vehicle dynamics. When integrated with advance control algorithms, automotive differential systems can improve vehicle maneuverability and stability.

Automotive differentials assist maintain vehicle balance and control by dynamically altering torque distribution to individual wheels, allowing for more precise and predictable handling. This improved stability and maneuverability improves the driving experience and allows cars to manage difficult road conditions more successfully. As a result, automakers are incorporating automotive differentials into their vehicles in order to give a thrilling driving experience and gain a competitive advantage in the automotive differential market.

Automotive Differential Market Analysis

The passenger vehicle segment held the largest industry share of 55% in 2022. The autonomous technology in passenger vehicles offers convenience, safety, and improved driving experience, increasing its demand. Additionally, passenger vehicles constitute a significant portion of the overall automotive sector with a large consumer base. The integration of automotive differentials into passenger vehicles enables enhanced traction control, stability, and optimized power distribution, resulting in improved performance and handling.

The All-Wheel Drive (AWD)/Four-Wheel Drive (4WD) segment captured 30% automotive differential market share in 2022 and will witness 5% growth till 2032. AWD/4WD systems offer enhanced traction, stability, and control, making them desirable for both off-road and on-road applications. AWD/4WD systems can further optimize power distribution to each wheel with the integration of automotive differentials, improving vehicle performance and handling. Furthermore, advancements in technology, such as sensor-based intelligent systems and precise torque vectoring, are fueling the growth of AWD/4WD with automotive differential solutions, contributing to the business development.

Automotive Differential Market Share, By Drive Type, 2022

The electric sector held 15% of the automotive differential market share in 2022 and will depict 10% growth rate between 2023 and 2032 backed by the growing demand for sustainable transportation and the increasing adoption of Electric Vehicles (EVs) by governments & consumers to reduce emissions and dependence on fossil fuels. The integration of automotive differentials into EVs enhances their performance, efficiency, and range, making them more appealing to consumers.

Additionally, advancements in battery technology and charging infrastructure are addressing previous limitations, further accelerating the espousal of electric vehicles. Moreover, government incentives, favorable regulations, and increasing investments in electric mobility are driving the segmental growth, making it the fastest-growing propulsion segment.

Asia Pacific dominated the global automotive differential market with around 35% share in 2022. APAC countries are increasingly investing in autonomous driving research & development, promoting favorable government policies, and fostering collaborations between technology companies and automakers. Moreover, the region's expanding middle-class and rising disposable incomes are driving the demand for high-performance vehicles equipped with automotive differentials. Such factors collectively contribute to regional progression emerging as the fastest-growing industry.

China Automotive Differential Market Size, 2021-2032, (USD Billion)

Automotive Differential Market Share

Some major players operating in the automotive differential industry are

  • GKN Automotive
  • Eaton Corporation
  • ZF Friedrichshafen AG
  • Borgwarner Inc
  • AAM (American Axle & Manufacturing)
  • Dana Incorporated
  • Magna International Inc.
  • AVL List GmbH
  • Timken Company

These players are focused on strategic partnerships and new product launches & commercialization for market expansion. They are heavily investing in research to introduce innovative solutions and garner maximum revenue in the market.

Automotive Differential Industry News:

  • In June 2022, American Axle & Manufacturing (AAM) announced that its electric driveline technology was utilized to power Mercedes-AMG GT 63 S E PERFORMANCE. AAM provided the rear drive unit for the performance automobile, which enabled it to achieve the finalist status for the 2022 Automotive News PACETM Award. This collaboration highlighted its electric powertrain technology and also placed it as the favored supplier for OEMs as it offered electric propulsion and e-mobility capabilities.
  • In January 2022, Dana Incorporated introduced three new planetary drives with broad ratio ranges, improved power density, and modular designs, enhancing Spicer Torque-Hub compatibility for tracked & wheeled vehicles, as well as Brevini winch applications. An electromechanically operated two-speed gearbox and an electromechanically controlled Limited Slip Differential (eLSD) provide cutting-edge shifting and traction.

This automotive differential market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2018 to 2032, for the following segments:

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Market, By Differential Type

  • Open Differential
  • Limited-Slip Differential (LSD)
  • Electronic Limited-Slip Differential (ELSD)
  • Locking Differential
  • Torque Differential

Market, By Vehicle Type

  • Passenger
  • Commercial

Market, By Drive Type

  • Front-Wheel Drive (FWD)
  • Rear-Wheel Drive (RWD)
  • All-Wheel Drive (AWD)/Four-Wheel Drive (4WD)

Market, By Propulsion

  • Internal Combustion Engine (ICE)
  • Electric

The above information is provided for the following regions and countries:

  • North America
    • U.S.
    • Canada
  • Europe
    • Germany
    • UK
    • France
    • Italy
    • Spain
  • Asia Pacific
    • China
    • Japan
    • India
    • South Korea
    • Singapore
    • ANZ 
  • Latin America
    • Brazil
    • Mexico
  • MEA
    • UAE
    • Saudi Arabia
    • South Africa


Authors: Preeti Wadhwani

Frequently Asked Questions (FAQ) :

The market size of automotive differential exceeded USD 22 billion in 2022 and will witness 4% CAGR from 2023 to 2032 due to the rising popularity of commercial vehicles and heavy-duty trucks

The passenger vehicle segment recorded 55% of the automotive differential industry size in 2022 owing to the increasing need for convenience, safety, and improved driving experience.

Asia Pacific held 35% of the industry share in 2022 driven by the growing R&D investments and the influx of favorable government policies.

The industry size from the electric propulsion segment is estimated to observe 10% growth till 2032 led by the rising demand for sustainable transportation worldwide.

Key firms operating in the automotive differential industry are GKN Automotive, Eaton Corporation, ZF Friedrichshafen AG, Borgwarner Inc, AAM (American Axle & Manufacturing), Dana Incorporated, Magna International Inc., AVL List GmbH, and Timken Company

Automotive Differential Market Scope

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Premium Report Details

  • Base Year: 2022
  • Companies covered: 20
  • Tables & Figures: 311
  • Countries covered: 18
  • Pages: 250
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