Automotive Plastics Market

The global automotive plastics market is expected to witness a significant growth at a CAGR of 10.45%, during the forecast period from 2018 to 2023. Factors driving the market growth are the increasing demand for fuel-efficient automobiles and surging demand for passenger and commercial vehicles. Furthermore, the anticipated rise in demand for bioplastics in various automotive applications is projected to propel the market growth in the years to follow.

However, fluctuations in the raw material prices of plastic are likely to hinder the market growth during the review period. Furthermore, recycling of automotive plastic components poses a major challenge to players in the market.

Environmental issues, such as global climate change and rising greenhouse gas emissions, have prompted automotive manufacturers to focus on the development of lightweight and fuel-efficient vehicles. Approximately, more than a quarter of all combined greenhouse gas emissions are associated with road transport vehicles. Customers demand better engine performance and look for reliability, safety, greater comfort, fuel efficiency, and reassurance about environmental impact. Owing to this, automakers are using lightweight materials, such as plastics and polymer-based components. Plastics have a great ability to reduce CO2 emissions and consequently lower fuel consumption by improving engine efficiency, reducing air resistance through design, and light weighting. According to the American Chemistry Council, reducing the weight of a vehicle by 10% can improve the fuel economy by 6-8%. Plastics reduce the weight of modern cars, thereby lowering fuel consumption in the average car by 750 liters over a lifespan of 150,000 km. In addition, the use of plastics has benefited manufacturers by reducing vehicle assembly time and costs. Various automotive components such as bumpers, fenders, and dashboards can be molded as single parts, which has lowered the production and assembly costs.

The high-performance plastics demand is growing at a considerable rate, which is driven by shifting consumer trends in favor of lightweight and fuel-efficient vehicles. Moreover, strict regulations such as the Corporate Average Fuel Economy (CAFE) in North America have compelled automobile manufacturers to seek alternative methods of vehicle weight reduction to improve efficiency. Initiatives by certain European countries to reduce CO2 emissions and improve air quality have driven the demand for battery-powered vehicles. These cars use a substantial amount of plastics in their basic structural components to curb weight and increase the durability of power sources. This is likely to fuel the demand for plastics in the automotive sector and propel market growth during the forecast period.

Bioplastics are derived from renewable biomass sources and from recycled plastic using microorganisms. Various bioplastics are being used in the automotive sector, including bio-based polyamides, polytrimethylene terephthalate (PTT), and bio-based polyolefines, starch-blends, and polylactic acid (PLA)-blends. Bio-based plastics helps to reduce the dependence on limited fossil resources (petrochemicals), by substituting them with renewable resources that are predominantly land-efficient annual crops, such as corn and sugar beets, castor (oil), switchgrass or perennial cultures, such as cassava and sugar cane. These bio-based plastics are not affected by the volatility in crude oil prices and hence, can be more beneficial. These products can be organically recycled at the end of their life cycle to create water, CO2, and biomass during a composting process. Light-weighting is an important factor for the automotive sector and is the main reason for continuously increasing demand for plastics to substitute heavier materials such as metals. Beyond the benefits of reduced weight, bioplastics can provide the most resource efficient plastics to help minimize the environmental impact of car production by further reducing CO2 emissions and energy use. High performance and unique potential for reducing a product’s environmental impact is expected to be the major factor boosting demand for bio-based plastics during the forecast period.

One of the major automotive producers, Toyota, uses bioplastics such as bio-based polyesters, bio-based PET, and PLA-blends in its production process. Europe is expected to be a major hub for the entire bioplastics industry owing to the significant R&D capabilities of the existing producers in the region. The need to reduce the reliance on fossil resources as well as the continuous advancements and innovations of the bioplastics industry is expected to provide lucrative opportunities to the manufactures during the review period.

The growth of the automotive plastics market is expected to be mainly affected by the continuously varying prices of the raw materials. Some of the major raw materials used for manufacturing plastics are ethylene, acetylene, propylene, toluene, MDI (methylene diphenyl diisocyanate), and TDI (toluene diisocyanate) that are derived from crude oil. The fluctuating prices of these raw materials due to fluctuations in the prices of crude oil are expected to affect the growth of the automotive plastics market in the coming years. During 2014–15, crude oil prices witnessed an approximate 65% decline due to sluggish global demand. In 2016, the Organization of the Petroleum Exporting Countries (OPEC) and its allies decided to reduce crude oil production, which has resulted in a continuous rise in the prices of petrochemical materials. In 2016, crude oil prices increased by 45% to reach USD 53.72 from USD 37.04 in 2015 and again declined by 15% in November 2018. These untimely variations in the crude oil prices directly impact the prices of plastics and are likely to hinder the growth of the automotive plastics market in the coming years.

The most commonly used in automotive applications include polyurethane (PU), polyethylene terephthalate (PET), polypropylene (PP), polyvinyl chloride (PVC), and acrylonitrile butadiene styrene (ABS). To meet the rising concerns regarding global warming and CO2 emission reductions, vehicles are being light weighted with more and more plastics, substituting heavier metals such as steel, wherever it is possible. However, recycling of the used plastic components is a major concern for the automotive manufacturers, as it is a very complex process requiring high energy cost. The increasing use of plastics has shifted the environmental burden from the CO2 emissions (use phase of automobiles) to material disposal (the end-of-life vehicle (ELV) stage).

European Union directive requires 95% of an ELV to be valorized and 85% of that to be recycled. This approximately accounts for 60% of the automotive plastics have to be recycled. In the case of a spent automobile, the ELV recovery and recycling process includes de-pollution and shredding, dismantling, physical and mechanical treatment of shredder residue (SR), and treatment of shredder residue by energy recovery. Only a few of these plastic parts are recycled, including bumpers, dashboards, and battery casings. Moreover, thermoset materials such as polyurethane foam are difficult to melt down and recycle due to its permanent cross-link structure. In addition, the use of foam is typically in an area of a vehicle where it cannot be readily accessed and then separated from other materials, where it eventually gets contaminated with other materials such as fluids, and often need to be landfilled. Furthermore, there are additional complications that block the recycling routes such as a lack of technology and market for these recycled products. This is projected to be a major challenge faced by the automotive plastics manufactures during the forecast period.