All-Wheel Drive Vehicle Market to Reach US$ 679.8 Bn by 2030

Market Participants Focus on Improving Performance of Existing Transmission Systems

The automotive sector has evolved at a rapid pace over the past couple of decades driven by advancements in technology and advent of several innovative concepts. Environmental regulations coupled with rapidly changing consumer preferences have also dictated the ongoing developments across the automotive sector around the world. In the current scenario, automotive companies are increasingly focusing on rolling out advanced all-wheel-drive systems to gain substantial share of the current market landscape. Over the past decade, advancements in the all-wheel drive (AWD) vehicle market have largely focused on improving off-road and cold-weather vehicle capabilities due to which, the global all-wheel drive (AWD) vehicle market is expected to have a positive outlook.

Technologies within the current all-wheel drive (AWD) vehicle market have advanced at a consistent pace due to which, a host of all-wheel drive cars have entered the global markets over the past few years– a trend that is expected to continue during the forecast period. The demand for all-wheel drive vehicles, particularly in cold and wet regions, is on the rise due to high traction on slippery surfaces. In addition, it increases the resale value of the vehicle. At the back of these factors, the global all-wheel drive (AWD) vehicle market is expected to reach US$ 679.8 Bn by the end of 2030.

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Technological Advancements Improve Safety and Fuel Efficiency, Likely to Aid Market Growth

Technological advancements across the global market for all-wheel drive (AWD) vehicles are expected to set the tone for market growth. Several technologies across the current market landscape have transformed modern day vehicles into power efficient, automated, and secured machines– a trend that is likely to propel the all-wheel drive (AWD) vehicle market during the assessment period. Although the demand for conventional part time 4×4 transmission is likely to remain high, with added advancements in technology, all-wheel drive is likely to emerge as a ‘must-have’ feature in vehicles in the future. For instance, the advent of the newly developed traction control system technology has played an imperative role in improving the performance of automotive vehicles and driver safety.

As the integration of the traction control technology continues to grow across cutting-edge 4×4 transmission systems, including all-wheel drive and 4-wheel drive, the demand for all-wheel drive vehicles is likely to scale up during the forecast period. At present, all-wheel drive is increasingly being deployed in various types of road-going vehicles such as crossovers, wagons, sedans, and SUVs, among others. In addition, as automotive companies emphasize on the production of electric vehicles, through-the-road all-wheel drive systems are set to gain immense popularity over the stipulated timeframe of the study.

Market Growth to Dip amid COVID-19 Pandemic

The COVID-19 pandemic is projected to have a strong impact on the global automotive sector. As the novel coronavirus continues to spread, governments across the world are compelled to enforce stringent lockdowns and restrictions on trade and transportation as a measure to contain the virus. The lockdown of industries across China in the first quarter of 2022 has had a strong impact on the global automotive sector due to which, the all-wheel drive (AWD) vehicle market is expected to have a slower growth rate than initial projections. However, as industries across China have opened up, production and other operations have resumed due to which, the market is expected to show minor signs of recovery.

While the automotive sector is expected to stroll through an uncertain period in 2020, the global all-wheel drive (AWD) vehicle market is estimated to grow at a sluggish pace. Disruptions across the supply chain and shortage of automotive components and materials are some of the other factors that are likely to hinder the production of all-wheel drive vehicles amid the ongoing pandemic.

Analysts’ Viewpoint

The global all-wheel drive (AWD) vehicle market is expected to grow at a moderate CAGR of 5% during the assessment period. The market growth is primarily driven by advancements in technology, increasing demand for fuel-efficient solutions, augmenting demand for solutions that improve driver safety, and other advantages over four-wheel drive. Although four-wheel drive vehicles are likely to remain popular around the world, technological advancements and improving performance of all-wheel drive (AWD) vehicles is likely to play a key role in generating considerable business for automotive companies.

All-Wheel Drive (AWD) Vehicle Market: Overview

  • The global all-wheel drive (AWD) vehicle market is anticipated to expand at a CAGR of 5% during the forecast period, owing to adoption of technologies that enhance vehicle efficiency and vehicle performance by manufacturers. Increase in demand for electric vehicles coupled with the demand for vehicle technology to reduce vehicle emissions is likely to propel the global all-wheel drive (AWD) vehicle market during the forecast period.
  • Technological advancements in the vehicle battery technology have enabled automakers to increase the cruising range of electric vehicles. Vehicle technologies adopted in electric vehicles, including all-wheel drive and four-wheel drive, further enhance vehicle ride handling and improve vehicle performance on-road as well as off-road, which is likely to increase the preference for electric vehicles. This, in turn, is anticipated to boost the adoption of electric vehicles and subsequently, drive the all-wheel drive (AWD) vehicle market during the forecast period.

All-Wheel Drive (AWD) Vehicle Market: Drivers

  • Rising urbanization and demand for smart cities around the world have propelled the usage of passenger cars and light commercial vehicles significantly, which is likely to augment the all-wheel drive (AWD) vehicle market during the forecast period
  • Vehicle manufacturers, especially engine manufacturers, are anticipated to invest heavily in research & development to design and develop new and technologically advanced engine components. This, in turn, is projected to boost the all-wheel drive (AWD) vehicle market during the forecast period.
  • Countries in Europe and the Americas experience cold weather. Therefore, during winter, owing to snowfall, it becomes challenging to maneuver vehicles on roads. The all-wheel drive technology can transfer engine power to front as well as rear wheels of vehicles, which provides drivers better traction and control, while driving during snowfall or through snow on the road. Furthermore, in hilly and mountain areas, the AWD technology can transfer power to front wheels enabling drivers to navigate easily. This, in turn, is anticipated to fuel consumer preference toward AWD vehicles and consequently, drive the market during the forecast period.

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All-Wheel Drive (AWD) Vehicle Market: Major Challenges

  • Disruptions in supply chain catering to the automobile industry, owing to shutdown of production and manufacturing facilities and raw material shortage caused by the coronavirus pandemic across the world, is estimated to contract the market in 2022. However, the market is anticipated to recover through economic losses by increasing production volume of vehicle components as well as vehicle production from 2022.
  • The cost of all-wheel drive (AWD) vehicles is comparatively higher than that of two-wheel drive (2WD), i.e. forward wheel drive (FWD) and rear wheel drive (RWD) vehicles. This, in turn, is anticipated to hider the all-wheel drive (AWD) market during the forecast period. However, global restrictions on vehicle fuel consumption and emissions, enacted by various regulatory authorities, are prompting automakers to improve engine-efficiency, which is likely to increase awareness about the AWD technology and subsequently, boost the market during the forecast period.

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