Stricter Regulations and Demand for Thermal Management Bolster Heat Exchanger Market Growth
Mounting fuel prices and reducing carbon ceiling cap are compelling automakers to deploy better thermal management systems in vehicles. Thermal management has become imperative for automakers to attain better fuel economy and avert loss of energy in order to comply with the regulatory standards.
In recent past, the transition towards sterner emission norms in countries such as China, India, Europe and Japan have urged automakers to achieve better fuel efficacy and to lower carbon footprints. This is primarily being achieved through the development of effective heat exchangers. Simultaneously, the surge in demand for vehicles embedded with turbocharged engines and automatic transmission are all attributing towards an accelerated growth of the market.
In recent times, automobile manufacturers have been focussed on improving thermal efficiency through sophisticated heat exchangers to save the heat that is otherwise wasted. This device allows heat transfer from one medium to another, which may have different temperatures. The two mediums are usually fluids flowing close to one another, separated by metals, which possess excellent heat transfer properties. Some of the heat exchangers utilized in the automotive industry are intercoolers, radiators and oil coolers among others. The dire need for improved thermal management to achieve high fuel economy is expected to drive the global automotive heat exchanger market during the forecast years of 2021 and 2025.
Increasing Sales of Passenger Vehicles Bolsters Automotive Heat Exchanger Market
The growing demand for passenger vehicles with improving purchasing power, especially in developing countries, is expected to have a remarkable effect on the automotive heat exchanger market. As entry-level vehicles come equipped with HVAC systems, they are poised to stir demand for heat exchangers. Efforts by automakers to provide a better driving experience is projected to percolate to improved vehicle engineering with top-notch components. Analysts also project that demand for premium vehicles with superior features of cooling will require sophisticated heat exchangers, propelling demand globally.
Fear of COVID-19 Infections to Boost Vehicle Sales for Personal Safety
COVID-19 has caused a colossal disturbance in the supply chain of the heat exchangers industry. Raw material suppliers faced a domestic and international ban on transportation and logistics. Additionally, manufacturing plants shut down due to the lockdown. This led manufacturers to suspend their vehicle production during the growing severity of the pandemic. As a result, operating profits decreased, and overheads increased levying financial pressure on the manufacturers. Simultaneously, the emission norms deployment has pressurized manufacturers to produce norm-compliant vehicles further squeezing their profit margins.
The COVID-19 pandemic that resulted in an overnight change in approach towards work reduced the need to commute on daily basis. As work-from-home policies continue to extend, the automotive heat exchanger market is likely to face the brunt of it as vehicle sales witness a plunge. However, automobile manufacturers anticipate that the demand for automobiles will surge in the near future as fear of infection via public transport will push consumers toward personal vehicles.
Introduction and improving the functionality of electric vehicles as environment concerns intensify are expected to dampen the sales for automotive heat exchangers as they are used in ICE vehicles. Nonetheless, demand for battery thermal management systems in electric vehicles can prove to be an excellent opportunity for the market. Improved demand for light commercial vehicles utilized for last-mile delivery, especially in the daily deliveries of essential needs and other business services, has balanced out the overall vehicle sales.
PHEV Sales to Drive Demand for Automotive Heat Exchangers
Technological developments in the heat exchanger have equally contributed towards better efficacy of the automobiles. Remarkable (plug-in hybrid electric vehicle) PHEV sales and the increasing utility of heat exchangers in them have been instrumental in propelling the market demand. PHEVs are expected to fuel market growth in the EV vehicle segment despite selling less than (battery electric vehicle) BEV and hybrid electric vehicle (HEV). Globally, the passenger car segment is expected to hold maximum share due to its increased production and demand.
Burgeoning demand for original equipment (OE) and aftermarket sales on the back of increased spending capacity of the population in the developing countries has bolstered the market growth and is likely to continue in the foreseeable future. Due to plunging demand and extended replacement time for new vehicles, pre-owned cars market are expected to provide a boost to the aftermarket segment, predict analysts.
Asia Pacific to Lead as India and China Emerge as Key Manufacturing Countries
Asia Pacific is one of the major automotive production hubs. Key automakers have expanded their business in the region with giant manufacturing bases. Favourable conditions, cheap labour overheads, conducive foreign direct investment policies and comparatively low capital investment have made Asia Pacific a lucrative region for investments. Additionally, easy raw material availability from China and ASEAN countries has helped manufacturers of heat exchangers to flourish in recent years. As the trend continues, the report predicts that the market will continue to prosper in this region throughout the forecast period.
Investments in Research and Development to Remain Integral to Players
Phenomenal progress has been done in the analysis, design and development by the heat exchanger manufacturers through considerable R&D investments. The market is seemingly fragmented with major key players forming alliances and gaining on the clientele base. Nonetheless, the market fragmentation is likely to expand during the forecast tenure with new entrants and existent players focusing on vertical integration.
Manufacturers are focussed on developing cost-effective and sustainable heat exchangers with reliable standards. Long term contracts with OEMs and automakers have become of keen focus areas for heat exchanger manufacturers with intent to expand their clientele base. Globally, manufacturers are embracing different strategies vis-à-vis new product development, joint ventures and mergers & acquisitions.
Faurecia and Mahle developed thermal management system during their collaboration in October 2017. Similarly, Fawer Automotive Parts LTD., jointly developed eco-friendly solutions with Hanon System chiefly devised for new energy vehicles in China after signing an official agreement.
Denso, AKG Thermal Systems, Inc, Danfoss, Valeo, American Industrial Heat Transfer Inc., Dana, T.Rad, Constellium N.V., Nippon Light Metal, AKG, Clizen, Climetal Heat Exchangers, Sanden, Mahle, Calsonic Kansei, G&M Radiator, Banco Products Ltd., Hanon are some of the major manufacturers of the market.