Automotive Refrigerants Market: One of the Supporting Pillars for the Automotive Sector

Automotive Refrigerants Market: One of the Supporting Pillars for the Automotive Sector

By Knowledge Sourcing Intelligence Blog

Automotive designs have changed a lot since their origin and a major share of the credits goes to industry players who have been pumping huge investments into research and development in order to create designs which offer a higher degree of comfort and safety as compared to previous designs, while improving profit margins for automakers. This ongoing process of evolution, which continues to transform every part of an automotive design, is transforming the way vehicle cabins cool. Regardless of their type, all refrigerants perform a basic function of cooling the vehicle cabin in order to offer comfort to the person behind the wheels and also to other occupants. Yet, chemical composition of different refrigerants, which affects the degree of harm they cause to the environment while performing their function, makes some of them highly recommended for use today while it has been known to drive some of the refrigerants out of the market since they failed to comply with the stringent environmental laws. R-134a, for instance, can still be found in many vehicles which have lived some part of their useful lifespan, but many of the new passenger cars and light commercial vehicles, which are coming with an air-conditioning unit into the market, use R-1234yf in place of R-134a refrigerant. Ongoing research and development in this sector by market players is expected to continue bringing some more advanced refrigerants into the market, but R-1234yf is expected to remain a primary refrigerant choice for many customers over the short term and probably over the medium term.

The growth of automotive refrigerants market is tightly anchored to the automotive industry growth across regions. Although many parts of the world are witnessing a continuous decline in the sales of vehicles, the automotive refrigerants market has still managed to hold its ground to some extent. A data from the International Organization of Motor Vehicle Manufacturers shows that years 2018 and 2019 saw a continuous decline in global automotive sales and this was for the first time the sector saw such a downturn after the global recession of 2007-09. The trend is clear from the figure given below:

Global Automotive Sales, 2006 to 2019

automotive refrigerants market 

Source: International Organization of Motor Vehicle Manufacturers

When the global recession kicked in about a decade ago, a shrink in the spending capacity of people severely hit the global automotive sector as the sales of vehicles witnessed a continuous decline in the years 2008 and 2009 (as shown in the figure give above). However, this time, the declining trend in global automotive sales has not been triggered due to any decline in spending capacity of customers, but due to already high penetration of vehicles in many regions which is shrinkage the demand for new vehicles. Some countries in North America and Europe, which are known to have high disposable income of people and high standards of living, already have high perc capita ownership of passenger vehicles, which, as a result, is shrinking the sales of new cars across them. But, a look at the broader picture would show that presence of a good number of vehicles on road is, in one way, supporting the growth of the automotive sector in such markets. 

Rising awareness among vehicle owners regarding the benefits of regular maintenance on their vehicle’s (or vehicles’) lifespan is increasing the number of people taking their vehicles to workshops for regular maintenance each year. Increasing penetration of internet and smartphones globally is giving impetus to companies which offer vehicle maintenance services at homes or at places which seem most convenient to customers. Rapid growth of this business worldwide is further increasing the number of people opting for getting their vehicles serviced. This is driving with it the demand for automotive parts which need replacement after a vehicle runs a specified number of kilometres. As a result, the demand for automotive refrigerants is witnessing a continuous increase, which is reflecting on the market growth. However, a continuous decline in automotive production over the past couple of years in many parts of the world has been offsetting this positive impact to some extent. According to a data from the International Organization of Motor Vehicle Manufacturers, the global automotive production took a dip over two consecutive years i.e. in the year 2018 and 2019. This was the first downturn in the global automotive production for this decade. The figure given below shows the trend:

Global Automotive Production, 2011 to 2019

automotive refrigerants market

Source: International Organization of Motor Vehicle Manufacturers

In conjunction to this drop, which was contributed to majorly by shrinking sales of vehicles, outbreak of the COVID-19 disease in Wuhan, China, in the beginning of this year, and its exponential spread to almost every country worldwide gave another hit to the automotive sector. As disruptions in global supply chains continue, on account of closing of borders by governments across countries, many automotive production facilities have temporarily shut down. Although we expect to see the sector recouping the slump to some extent when the situation becomes normal and restrictions by governments are lifted, it would take the sector some time to show any good growth. We expect some disruptions in the automotive sector over the next five years, which are likely to strengthen it. Even if the trends shift towards electric mobility, refrigerants will continue to remain a key part of an automotive. Although the type of refrigerant being used in vehicles might change from what it is now, the demand for automotive refrigerants will continue to remain significantly strong. This would continue to drive their adoption, thus augmenting the market growth.

About the Author:

Dhiraj Kumar Sharma is a Market Research Analyst at Knowledge Sourcing Intelligence. He combines his outright understanding of technologies with years of experience working in the industry to deliver actionable information to clients who span across industries and geographies. Dhiraj often works closely with clients in order to better understand their requirements and is known for the quality of market insights he delivers to them.