Automotive Aluminum Market - Forecast(2023 - 2028)

Automotive Aluminum Market Overview

The automotive aluminum market size is forecast to reach US$104.6 billion by 2027 after growing at a CAGR of 8.1% during 2022-2027. Automotive aluminum is used extensively in several automobile components of passenger cars and commercial vehicles owing to the low-weight property of aluminum. The demand for passenger cars globally is increasing among consumers and this will drive the growth of the market in the forecast period. For instance, as per the July 2021 statistics by the European Automobile Manufacturers Association, passenger car registrations in the European region jumped by 25.2% in the first of 2021. Furthermore, most of the aluminum used in automotive components is recyclable, making the vehicles environmentally friendly. Strict regulations implemented by the government advocating the higher use of eco-friendly materials in vehicle production for reducing emissions encourage market players to amplify aluminum portfolio in automobiles and this will drive the growth of the market. For instance, Norway-based aluminum supplier Norsk Hydro ASA provides recycled aluminum for use in automobile components aims to increase its overall recycled aluminum output to 27,000 tonnes by 2025. Cast aluminum is projected to witness the highest demand in the forecast period. Power train application which includes fuel systems, engine blocks, and heat exchangers, is projected to witness the maximum demand in the forecast period. The high cost associated with aluminum might hinder the growth of the market.

COVID-19 Impact 

The automotive aluminum market was moderately affected by the COVID-19 pandemic. Disturbances in the supply chain disrupted the whole aluminum market ecosystem leading to a shortage of raw materials and slowing down the production process. As per the 2020 interim report by CHALCO, the supply of aluminum-faced challenges, lowering the demand for aluminum in the international market amid the pandemic. Furthermore, in early April, the LME (London Metal Exchange) aluminum price fell to the lowest point of USD1,455 per tonne since February 2016. However, the demand for aluminum gradually increased towards the end of 2020 with massive expansion in the automotive industry. Going forward, the market is projected to witness huge growth with increasing demand for lightweight vehicles with reduced emissions.

Report Coverage 

The report: “Automotive Aluminum Market Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments of the Automotive Aluminum Industry.

Key Takeaways: 

• Cast aluminum is leading the automotive aluminum market. This form of aluminum allows automobile manufacturers to produce lightweight components for powertrains and engines, ultimately helping in improving fuel efficiency. 
• Passenger cars will drive the growth of the market in the forecast period. For instance, as per the June 2021 report by European Automobile Manufacturers Association, passenger car registrations in the European region surged by 53.4% in May 2021 compared to the same month in 2020. 
• The Asia-Pacific region is projected to witness the highest demand for aluminum owing to the booming automobile industry in the region. According to the data by the China Association of Automobile Manufacturers, the annual sales volume of new energy vehicles in China is expected to touch 3 million units by 2025 which was 1.2 million units in 2019. 

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Automotive Aluminum Market - By Product Form 

Cast aluminum dominated the automotive aluminum market in 2021. This form of aluminum is majorly used in many automobile components such as engines, pistons, wheels, transmission housing, and many more. It allows automakers to manufacture lightweight automobiles. Owing to these robust qualities, market players are focusing on enhancing the automobile cast aluminum portfolio in the market. For instance, in March 2021, Sandhar Technologies, a global manufacturer of aluminum automotive components, acquired Unicast Autotech Pvt Ltd. This acquisition helps Sandhar Technologies to expand its production of cast aluminum auto components. Such developments in cast aluminum will increase its demand in the automotive aluminum market in the forecast period. 

Automotive Aluminum Market - By Vehicle Type 

Passenger cars dominated the automotive aluminum market in 2021. Aluminum is implemented in large quantities in several passenger car components that include heat shields, transmission, and driveline, cylinder liners, bumpers, etc. The demand for passenger cars is expanding with increasing production and sales of passenger cars and this will trend will be there in the forecast period which will augment the higher uses of aluminum in passenger cars. For instance, as per the August 2020 data by the China Association of Automobile Manufacturers, the new energy vehicle segment is expected to account for 25% of total vehicle sales by 2025. Similarly, as per the March 2021 data by European Automobile Manufacturers Association, passenger car registrations in the European Union surged by 87.3%, reaching 1,062,446 units. Such high demand for passenger cars will stimulate the higher utilization of automotive aluminum in various auto components in the forecast period. 

Automotive Aluminum Market - By Application 

Powertrain application dominated the automotive aluminum market in 2021 and is growing at a CAGR of 8.6% in the forecast period. Powertrain application includes engine blocks, fuel systems, heat shields, heat exchangers, and many other components. The high demand for aluminum in this application segment is attributed to the increasing demand for hybrid technology among automobile manufacturers. Accordingly, market players are proactively responding to these advanced technology needs from auto manufacturers. For instance, in March 2019, Norsk Hydro ASA manufactured the world’s smallest engine manifold, an innovative aluminum component for BMW's plug-in hybrid electric vehicle program. Such developments in the powertrain application will increase the demand for aluminum parts which will drive the growth of the market in the forecast period. Car body application is projected to drive the market’s growth significantly in the forecast period. 

Automotive Aluminum Market - By Geography 

The Asia Pacific region held the largest market share in the automotive aluminum market in 2021 with a market share of up to 34%. The high demand for automotive aluminum is attributed to the region’s booming automobile industry. Countries like China and India are witnessing a boost in the production and sales of automobiles. According to the data by the China Association of Automobile Manufacturers, in September 2021, the production of Chinese commercial vehicles touched 310000 units, increasing 35.5% month on month. Similarly, in January 2021, electric car giant Tesla set up its R&D centre in Bengaluru and registered its subsidiary as Tesla India Motors and Energy Private Limited. Such massive expansion in the automobile sector will increase the manufacturing of aluminum components, thereby increasing the demand for automotive aluminum in the region. The North American region is anticipated to witness significant demand for automotive aluminum in the forecast period owing to the implementation of Corporate Average Fuel Economy (CAFE) standards in the region.

Automotive Aluminum Market Drivers 

Increasing demand for passenger cars will drive the market’s growth 

Automotive aluminum finds its widespread application in the production of various passenger car components such as fuel systems, heat shields, heat exchangers, subframes, and suspension parts to make cars lightweight. The demand for passenger cars is increasing across numerous demographics and this will drive the growth of the market in the forecast period. For instance, as per the July 2021 data by the European Automobile Manufacturers Association, in June 2021, registrations in the passenger car segment surged, with Germany witnessing maximum demand in the passenger car segment with a 24.5% increase, followed by Spain (+17.1%) and Italy (+12.6%). Similarly, as per the data by India Brand Equity Foundation, passenger cars dominated the Indian auto market with a market share of 12.9% of over 20.1 million vehicles in FY20. Such increasing demand for passenger cars will augment the higher requirement of automotive aluminum for the manufacturing of various passenger car components, and this will drive the growth of the market in the forecast period. 

Government regulations regarding environment-friendly material use will drive the market’s growth 

Government bodies globally are strictly monitoring the implementation of environmentally friendly materials in the production of automobiles to lower carbon footprints and reduce emissions. For instance, the US-based Environmental Protection Agency (EPA) regulates greenhouse gas emissions from automobiles such as garbage trucks, buses, passenger cars, etc. This propels auto manufacturers to use aluminum in vehicle production as this aluminum is highly recyclable and helps in reducing carbon footprints and emissions in automobiles. As per the April 2021 news by The Aluminum Association, increasing collaboration across the aluminum and automotive sector provides a great opportunity for effective reduction of carbon emissions with the widespread use of recycled auto body sheets. Such massive implementation of aluminum owing to government regulations and collaborations will drive the growth of the automotive aluminum market in the forecast period. 

Automotive Aluminum Market Challenges 

High cost of aluminum might hinder the market’s growth 

The high cost associated with aluminum has been a major challenge in the automotive aluminum market. Aluminum’s high cost restricts its expanded use in the automotive industry. As per the October 2021 report by Pacific Northwest National Laboratory (PNNL), the production speed of advanced aluminum alloys was improved through PNNL’s shear-assisted processing and extrusion (ShAPE) process. However, manufacturing costs are 30% more expensive than alloys produced through the conventional extrusion process. The report states this high price difference is a limiting factor for vehicles. Such a high price of aluminum might hamper the growth of the automotive aluminum market in the forecast period. 

Automotive Aluminum Industry Outlook 

Investment in R&D activities, acquisitions, product and technology launches are key strategies adopted by players in the automotive aluminum market. Major players in the automotive aluminum market are: 

1. Norsk Hydro ASA
2. Alcoa Inc.
3. Novelis Inc.
4. CHALCO
5. Rio Tinto
6. Dynacast International
7. Sandhar Technologies Limited
8. Constellium N.V.
9. UACJ Corporation
10. AMG Advanced Metallurgical Group NV
11. Jindal Aluminum
12. Others 

Recent Developments 

• In October 2021, Norsk Hydro ASA invested in a new aluminum extrusion press at its manufacturing plant in China. This press will support the production of aluminum extruded components for the rising automobile sector in China. 

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