The global all Wheel Drive Market size is projected to reach USD 53.8 billion by 2027, from an estimated value of USD 35.9 billion in 2022, at a CAGR of 8.4% during forecasted period. Rapid urbanization, Industrialization and the rising standard of living of customers is leading to increased demand for premium cars, and the demand for SUVs is expected to boost the all wheel drive market. Furthermore, the increasing number of cars and traffic has increased the demand for vehicle dynamics and safety systems. Thus increasing demand for SUVs and premium cars which uses all wheel drive systems for better handling is driving the all wheel drive market.
Regions with unsafe and rough terrains such as region with heavy snow and winter conditions require vehicles with improved handling. The requirement of these improved vehicles are the driving the demand for multi-wheel drive systems such as all wheel drive system. For instance, in the extreme wintery conditions when a vehicle requires an extra grip to remain in control, the AWD and 4WD systems act as a good option for the consumers.
In the rough terrain conditions such as uneven, rocky surfaces, where the traction on all four wheels is not equal, the requirement for distribution of torque to different wheels at different times justifies the presence of the AWD or 4WD systems. These systems can send optimal amount of torque to the tires providing better traction and stability to the vehicle. Considering these factors in the regions where these conditions are found, the demand for all wheel drive systems is set to increase.
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The automatic AWD segment is expected to register the highest growth rate of 8.6% from 2022 to 2027. Automatic all wheel drive segments are presently being introduced in only high-end premium vehicles in the global market. Automatic all wheel drive offers various advantages over the manual AWD such as they do not require driver input and, can be connected automatically, also they have a better response, better fuel efficiency, and are more sophisticated in design.
Developed countries are expected to be the early adopters of automatic AWD technology owing to their stringent vehicle emission regulations. Also, automatic AWD are best suited for premium cars and, North America and Europe are the largest markets for premium cars, the demand for automatic AWD in the region is projected to grow during the forecast period.
The all wheel drive demand in electric vehicles is expected to grow at the highest CAGR by 2027. The significant demand is attributed to the fact that in electric vehicles, AWD is easier to install and offers better battery utilization. Further, electric vehicles offer enhanced acceleration, are quieter, and do not produce any exhaust as conventional vehicles hence, the market for EV is projected to grow. Additionally, a large number of EV OEMs offers preinstalled automatic AWD system for improving range and vehicle safety, leading to the growth of the overall all wheel drive market.
The Asia Pacific is estimated to be the largest and fastest-growing market due to growth in key countries such as China, Japan, India, and South Korea. The growing popularity of SUVs and MUVs in the Asia-Pacific has contributed to the growth of AWD market. The growth of demand for AWD vehicles has created an opportunity for AWD system manufacturers to develop highly efficient AWD systems.
The region is also an emerging leader in automobile manufacturing of high-end vehicles across the globe and is expected to consolidate this position during the forecast period. The boom in automobile production can be attributed to the growth of car ownership, rapid urbanization, and rising standard of living. Additionally, Asian countries such as China are leading manufacturers of automobile and automobile components which has reduced the cost of AWD systems in the region.
Thus, in the coming years, the all wheel drive market is expected to witness strong growth during the forecast period, mainly, due to stringent emission standards and the expansion of the urban networks. Also, the development of efficient AWD systems and developments in the design of SUVs and MUVs are expected to drive the all wheel drive market.
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