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Limited Slip Differential Market Size, Share & COVID-19 Impact Analysis, By Application Type (Sedan and Hatchback and SUV and Pickup Trucks), By Type (Mechanical LSD and Electronic LSD), and Regional Forecast, 2023– 2030

Region : Global | Format: PDF | Report ID: FBI103578

 

KEY MARKET INSIGHTS

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The global limited slip differential market size was valued at USD 3.76 billion in 2022. The market is projected to grow from USD 4.08 billion in 2023 to USD 9.23 billion by 2030, and the market is expected to grow at a CAGR of 12.39% during the forecast period. 


A Limited-Slip Differential (LSD) is a vital vehicle component that takes torque from the transmission and distributes it between the wheels. It enables the rotation of two different output shafts at different speeds but restricts the maximum difference between them. It also averts the excess power from being circulated to one wheel, which applies more rotational drive system energy to the wheel having less grip. 


The LSD helps to improve the power efficiency of the vehicle, provide better turning performance, improve traction control, and enhance the controlling ability of the driver. Compared to the traditional car differential, the limited slip differential is highly superior and used in high-end cars. Most luxury car manufacturers have incorporated LSD in their vehicles as it offers occupants improved turning performance, stability and comfort. Therefore, growing demand for efficient automotive performance is driving market growth.


COVID-19 IMPACT


Shortage of Raw Materials Resulted in Production Delays and Increased Manufacturing Costs Amid the Pandemic


The COVID-19 pandemic has severely impacted limited slip differential market dynamics. The outbreak disrupted the supply chain, resulting in a shortage of raw materials and components needed to manufacture LSD. This caused production delays and increased costs for manufacturers, thus, slowing market growth. The stringent lockdown restrictions led to input shortages and production and demand disruptions from automobile manufacturers and their sub-contractors.


According to the International Organization of Motor Vehicle Manufacturers (OICA) data, production declined by 16% globally to less than 78 million vehicles in 2020, which is equivalent to sales in 2010. Furthermore, the manufacturing sector had implemented new security measures to prevent the spread of COVID-19 that had resulted in increased costs for manufacturers.


LATEST TRENDS


Rising Investments by Leading Manufacturers into Development of Advanced Products to Aid Market Augmentation


Several manufacturers are investing heavily in the R&D of electronic limited slip differentials. For instance, ZF developed an electronic Limited Slip Differential (e-LSD) with a chipset in the ECU that enables vehicle software to be updated via the cloud, with cyber-security standards protecting the update process. The e-LSD is fully networked with the vehicle braking system, bringing claimed benefits to both off-road and on-road driving dynamics and stability and comfort.


The electronic limited-slip differential improves traction by monitoring vehicle sensors and driver inputs to determine the optimal engagement for the given driving conditions. Using the data, the eLSD will optimize the torque split between the right and left rear wheels, thus providing enhanced stability and maximum traction. Moreover, the driver can control the vehicle more efficiently, even on low-grip driving surfaces and less-than-ideal conditions.


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DRIVING FACTORS


Rising Disposable Income and Customer Inclination Towards Luxury and SUV Vehicles to Drive Market Expansion


Sports Utility Vehicles (SUVs) account for a significant portion of the global vehicle fleet. The number of SUVs worldwide increased from around 35 million in 2010 to about 320 million in 2021, which accounted for more than 60% of the total increase in the global car fleet since 2010 and is equivalent to the whole European car fleet.


Moreover, around one-third of all car sales in Europe and half of all cars sold in the U.S. are SUVs. SUVs are considered symbols of status and wealth in China. In India, changing consumer preferences and increased disposable income have contributed to robust demand for luxury SUVs. Furthermore, according to the International Energy Agency (IEA), more than 45% of the global car sales in 2021 were SUVs, compared with less than 20% before 2010. This SUV sale sets a new record in market share and volume.


Luxury vehicle sales have continued to increase (despite the overall negative effect on car sales during the pandemic and subsequent chip shortage). For instance, Rolls Royce (a BMW subsidiary) witnessed an increase in sales by 41% in 2021 despite COVID-19. Similarly, luxury carmaker Bentley (a Volkswagen subsidiary) reported a 31% increase in vehicle sales in 2021. Luxury and premium car sales have grown more broadly in key markets such as the U.S. and China as COVID-19-induced restrictions have led to more disposable income that wealthy customers can spend. This factor will bode well for the demand for limited slip differentials.


RESTRAINING FACTORS


Anticipated Rise in Sales Of Electric Mobility May Restrict Market Growth


OEMs are anticipated to embrace electric mobility more widely in the 2020s. According to the IEA, 18 of the 20 largest OEMs witnessed nearly 90% of all worldwide new car registrations in 2020. Due to the boom in new car registrations, the OEMs have announced an increase in the number of available models and boosted production of Light-Duty Electric Vehicles (LDVs).


Several manufacturers have announced targets to surpass previous EV announcements with an outlook beyond 2025. Over ten of the largest OEMs worldwide have declared electrification targets for 2030 and beyond. Additional stimulus measures that supplement existing policy support (purchase incentives, tax subsidies), continued decrease in battery costs and more choice in available models contribute to the continued electric vehicle uptake. These factors will drive the transition to electric mobility, which in turn will restrain the growth of the market.


SEGMENTATION


By Application Type Analysis


SUV and Pickup Trucks to hold the Highest Market Share Owing to Their Booming Sale Across the Globe


Based on application, the market is segmented into SUV and pickup trucks and sedan and  hatchback.


The SUV and pickup trucks segment is expected to be the fastest growing by application type between 2023 and 2030. The sales of luxury SUVs are booming globally, accounting for its highest market share. The same is expected to dominate in the coming years owing to the disposable income of people and their preference towards buying SUVs and luxury-featured cars, considering safety measures. Increasing penetration of All-Wheel Drive (AWD) and Four-Wheel Drive (4WD) vehicles and company’s innovation 7 new product launch in SUV segment are creating a demand for LSD in SUV segment.


Sedans & hatchbacks accounted for a significant automotive limited slip differential market share in 2022. Limited slip differential is not standard in every vehicle; it is equipped in some cars as a standard and in some models of performance vehicles. Off-road vehicles such as Jeep Wrangler, Toyota Land Cruiser, Jeep Grand Wagoneer, and many other luxury sedans may have an advanced version of LSD, such as an active differential, to help them to identify & control changing road conditions.


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By Type Analysis


Mechanical LSD Segment is expected to dominate the Limited Slip Differential Market due to Their Affordability and Less Complexity


Based on type, the market is categorized into mechanical LSD and electronic LSD.


The mechanical LSD held the highest market share in 2022. Most companies have clutch-based differential as a standard in major regions. The mechanical differential is programmed to allow slip when it is beneficial in some of the vehicle models.


A mechanical type of LSD is surrounded by core gearing with a pair of pressure rings. These further exert the force of a set of clutch plates. This LSD type is further categorized into one-way, two-way and one-seven halfway, Torsen and others. The drawback of mechanical LSD is it requires regular maintenance to keep operational. Moreover, these are prone to wear out altogether, making them more expensive to replace.


The electronic LSD segment is the fastest growing by type, with a highest CAGR between 2023 and 2030. In electronic LSD, the interaction between the clutch and the pressure rings can be electronically controlled to improve the vehicle’s response time. Rising sales of electronic LSD-equipped vehicles and continuous development related to electronic LSD by major market players in each region are creating a demand for the electronic LSD segment across the globe.


REGIONAL INSIGHTS


Asia Pacific Limited Slip Differential Market Size, 2022 (USD Billion)

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Asia Pacific to Capture the Largest Market Share in Automotive Limited Slip Differential Market


Currently, Asia Pacific is the largest market in terms of value. It will dominate in the forecast period owing to increased vehicle sales, adoption of the latest technology, increasing demand for safe & luxurious featured vehicles and other factors. Moreover, improving macroeconomic factors such as increasing purchasing power, changing lifestyle due to rapid urbanization, awareness about the active safety system, increased SUV registration, and availability of raw materials provides lucrative opportunities for market expansion. The well-established automotive industry in the major countries in the region, such as China and Japan, is expected to fuel the market growth.


The number of all-wheel drive system-equipped vehicles drives the North America market. For instance, more than half of the vehicles sold in 2020 were equipped with a four-wheel drive system. Furthermore, stringent regulations related to driving safety are the top priority for the players operating in this region. New strategies adopted by leading manufacturers will ensure market growth in the upcoming years.


Europe region also contributes significantly to the growth of the market. Factors such as the demand for high-performance vehicles, driving comfort and the implantation of EURO-NCAP rating for vehicle and driver safety piqued the interest of automotive manufacturers in Europe are supporting the automotive industry to grow their business in Europe.


The rest of the world has witnessed a steady economic improvement in the last few years. Also, the significant increase in demand or use of super, luxury & premium vehicles in a few countries, including UAE, South Africa, and Saudi Arabia, is propelling market expansion.


KEY INDUSTRY PLAYERS


Companies are Focusing on Mergers & Acquisitions, and Partnerships to Gain Competitive Edge


The key market players are focusing on cost-reduction strategies, strategic partnerships, and acquisitions to enhance their product offerings. They are developing modern automotive differential technologies to strengthen their footprint in the global market. For instance, In October 2021, Toyota Motor Corporation launched a new Land Cruiser equipped with LSD (Limited Slip Differential) manufactured by JTEKT Corporation. The company's "TORSEN LSD Type-B", "TORSEN LSD Type-C," and "3rd Generation Tapered Roller Bearing Hub Unit" were installed in Toyota's new land cruiser.


LIST OF KEY COMPANIES PROFILED:



KEY INDUSTRY DEVELOPMENTS:



  • March 2022:Ford upgraded its new Fiesta ST with a limited-slip differential with enhanced torque vectoring control to deliver enhanced traction without sweltering excess torque with brake interventions.

  • November 2021:  American Axle & Manufacturing's TracRite differentials were the critical components installed in the 2022 GMC HUMMER EV to deliver significant power and performance. The new super truck features AAM TracRite EL Electronic Locking Front Differential.

  • September 2021: Eaton launched a new line of limited slip differentials for electric vehicles to provide enhanced traction in adverse conditions, optimize vehicle performance at any speed or traction condition, and improve trailering stability.

  • August 2021: Eaton Corporation announced that its vehicle group had launched its latest extensive lineup of specialized differentials for electric vehicles with comparable performances at par with IC engine vehicles. The company confirmed that its traction control family of differentials could offer enhanced traction in adverse conditions and improved trailering stability.

  • July 2020: Dana Limited introduced its new Spicer Trac-Lok Limited Slip Differential for medium-duty truck applications. The new model autonomously delivers improved vehicle handling within a compact, lightweight design for enhanced traction, durability, and performance.


REPORT COVERAGE


The report provides a limited slip differential market analysis and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.


An Infographic Representation of Automobile Limited Slip Differential Market

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REPORT SCOPE & SEGMENTATION
















































ATTRIBUTE



DETAILS



Study Period



2019-2030



Base Year



2022



Estimated Year



2023



Forecast Period



2023-2030



Historical Period



2019-2021



Growth Rate



CAGR of 12.39% from 2023 to 2030



Unit



Value (USD Billion)



Segmentation



By Application Type



  • Sedan and Hatchback

  • SUV and Pickup Trucks



By Type



  • Mechanical LSD

  • Electronic LSD



By Region



  • North America (By Application Type, By Type)

    • U.S.  (By Application Type)

    • Canada (By Application Type)



  • Europe (By Application Type, By Type)

    • Germany (By Application Type)

    • France (By Application Type)

    • U.K. (By Application Type)

    • Rest of Europe (By Application Type)



  • Asia Pacific ( (By Application Type, By Type)

    • China By Application Type)

    • India (By Application Type)

    • Japan (By Application Type)

    • South Korea (By Application Type)

    • Rest of APAC(By Application Type)



  • Rest of the World (By Application Type, By Type)



Frequently Asked Questions

As per the Fortune Business Insights study, the market size was USD 3.76 billion in 2022.

The market is likely to grow at a CAGR of 12.39% over the forecast period (2023-2030).

The SUV and pickups segment is expected to lead the market due to the development of high-performance SUVs at affordable.

Some of the top players in the market are Drexler Automotive GmbH, Dana Limited, and Eaton.

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