Automotive Gear Market to Witness Steady Growth through 2028

Tier 3 Players Account for Over 60% Share in the Automotive Gear Space : The automotive gear market is a highly fragmented landscape, which can be ascertained from the fact that tier 3 players account for over 60% revenue share of the market. With a large-scale presence across the automotive gear space, the tier 3 players will consistently rely on small and local businesses, on the back of numerous cost benefits. The tier 3 players in the automotive gear market are majorly focusing on expansion of production facilities and introducing warehousing facilities to offer just-in-time deliveries as per customer-specific requirements. Moreover, tier 3 players have been emphasizing on strengthening product integrity in a bid to achieve long-term customer retention. Tier 1 and 2 Players Looking Forward to Consolidate their Foothold in APEJ : For tier 1 and tier 2 companies operating in the automotive gear market such as Altra Industrial Motion Corporation, Linamar Corporation, Showa Corporation, and many more, geographical expansion is evolving as a preeminent focus area to tap into new customer segments. These companies are looking forward to leverage on evolving opportunities in developing economies across the Asia Pacific, driven by the overwhelming demand for vehicles and aftermarket products. Asia Pacific excluding Japan (APEJ) is also likely to offer tremendous opportunities with easy availability of raw materials, emerging as a highly lucrative region in the automotive gear market. Moreover, these companies are entering into strategic collaborations and acquisitions, in a bid to solidify capacity of their production lines. Use of Advanced Plastics- A Prominent Strategy to Shrink Manufacturing Costs While Upgrading Durability : The practice of ‘light weighting’ is becoming increasingly popular with automakers around the world as they are vying to comply with an EPA mandate, which calls for automobiles to average 54.5 mpg (miles per gallon) by 2025. Automakers have started relying on gears made of advanced plastics, as they are relatively lighter and offer better fuel efficiency when compared to that of the metal counterparts. With this trend gaining grounds, manufacturers of automotive gear are intensifying their capacity to offer plastic gears and are no more stuck with the conventional metal-centric perspective. Manufacturers of automotive gear are also looking forward to leverage substantial benefits, on the back of low manufacturing costs involved, while producing highly-durable plastic gears for use in automobiles. Moreover, the demand for plastic automotive gears reinforced with carbon fiber gaining momentum in passenger cars, encouraging automotive gear manufacturers to diversify their existing offerings with new additions.

Limited Geographical Presence- A Perennial Challenge to be Addressed by Tier 2 and Tier 3 Companies

Limited geographical presence and dependency on a limited customer base are some of the crucial challenges to be addressed by tier 2 and tier 3 companies in the automotive gear space. This confinement of the tier 2 and tier 3 companies in the automotive gear market is identified to have adverse impact on their profitability ratios, thereby evolving as a focal point gaining centerstage. In a bid to overcome this challenge, these companies in the automotive gear market are pushing wide-spread establishment of new production units across different regions. Moreover, these companies operating in the automotive gear market are also reinvigorating potential of their sales and distribution channels to expand their reach across multiple regions.

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