Global Automotive Interior Market - 2022-2029

Global Automotive Interior Market - 2022-2029

Market Overview

The global automotive interior market size was worth US$ XX million in 2021 and is estimated to reach US$ XX million by 2029, growing at a CAGR of XX % during the forecast period (2022-2029).

A vehicle’s interior, which includes headliners, cockpit modules, door panels, automotive seats and other components, is specially intended to provide comfort, grip and sound insulation to the vehicle cabin. Interior trims, upholstery and other adornments play an essential role in a car's saleability. Furthermore, the interior of a vehicle is the first and most crucial factor that influences a buyer's perception of the quality of a vehicle.

The need for fuel efficiency, technological advancement, an increase in demand for luxury vehicles and a focus on driver well-being all contribute to the growth of the global automotive interiors market. However, the escalation of the trade war, high automotive import tariffs and rising raw material prices limit the market growth. Furthermore, the market's untapped developing markets in Asia & Africa and advancements in-vehicle infotainment systems create lucrative growth opportunities.

Market Dynamics

The need to improve fuel efficiency, technological advancement, increased demand for luxury vehicles, and a focus on driver well-being are the key factors driving the growth of the automotive interiors industry. However, the escalation of the trade war, the increase in automotive import tariffs and the rise in raw material prices limit the market growth. The market experienced significant growth due to anticipated growth from untapped developing markets. The advancement of in-vehicle infotainment has also fueled market growth in these regions.

The need to increase fuel efficiency

Because of rising environmental concerns, such as high pollution levels, there is an increase in demand for fuel-efficient vehicles. As a result, vehicle manufacturers reduce overall vehicle weight to improve fuel efficiency. They have replaced heavy steel components with high-strength steel, aluminum, or glass-fiber-reinforced polymers, reducing vehicle weight by 10% to 60%, depending on various factors.

They create lightweight materials with high rigidity to reduce vehicle weight. Grupo Antolin, for example, collaborated with 3M in 2016 to develop a polypropylene (PP) grade material to reduce weight and increase vehicle efficiency.

Technological advancements & growth in demand for luxurious vehicles

Technological advancements are growing because of the increased demand for attractive, comfortable and aesthetic features in automotive vehicles, particularly passenger vehicles. However, in January 2017, Faurecia demonstrated the concept of customizable controls to address the issue of a bulky dashboard. It is expected that display screens and separate display panels will decrease.

Luxury car brands like Audi and BMW generally provide high-quality equipment, comfort, performance and technologically innovative automotive interiors. These companies intend to use customizable controls that can be easily integrated into dashboard materials. From 2016 to 2017, global sales of luxury vehicles increased by about 4%.

The growing demand for high-end vehicles is expected to increase innovative automotive interiors. As a result of these factors, the need for innovative automotive interior solutions is expected to rise.

High costs and volatility in raw materials price

Although the prices of advanced automotive interior components have decreased in recent years, advanced automotive interior electronics components remain more expensive. Previously, the share of a vehicle's electronics system was only 1–2 percent of the total vehicle cost; however, due to the rising trend for enhanced user experience and convenience features, the share of such systems has now increased to 8–12 percent of the total vehicle cost. As a result, the high price of such high-tech solutions and features are currently only available in high-end luxury cars.

Features include 8-/10-way adjustable front row seats, middle row captain seats with reclining function, multi-information display, infotainment system with cameras, gesture controls, dual-zone climate control, ventilated seats and massaging seats are examples of high-cost features found primarily in premium segment passenger cars. Customers who purchase luxury vehicles are willing to pay a premium for convenience and innovation. As a result, unless the cost of these innovative technologies is reduced, they will not find widespread application in low-end or economic segment vehicles. The high costs would hinder the growth of the automotive market's overall advanced and innovative automotive interior components.

COVID-19 Impact Analysis

The automotive interior market is expected to contract following COVID-19 due to the impact on vehicle production. However, a steady recovery in vehicle production after 2020 will support the market's growth in the coming years. Automotive interior suppliers, like the majority of companies in the automotive industry, were affected by the outbreak. For example, Faurecia's sales in the first quarter of 2020 were down around 31% from the same period in 2018. Given COVID-19 majority of affected companies halted production. In the first half of 2020, the group's sales fell by around 35.4 percent. Revenues generated in Europe & North America were still down by 22% and 14%, respectively, in June 2020 compared to the previous year.

Similarly, COVID-19 significantly impacted Marelli's overall output in the first two quarters of 2020. One of the companies in the Marelli formation is based in Italy, one of the worst-affected countries during the initial pandemic. Following the nationwide lockdown, which began in March 2020, the company was forced to close its facilities in the country for approximately two weeks. However, the company resumed operations in April after taking the necessary precautions. Similarly, in March 2020, the company temporarily ceased production in North America. The global pandemic also impacted Grupo Antolin in the first half of 2020. For example, the company's revenue fell by 42 percent in the year's first half compared to the previous year.

Segment Analysis

By component, the automotive interior market is segmented into instrument panels, infotainment systems, interior lighting, body panels and others.

Technological advances in the infotainment systems

The largest segment of the automotive interior market is the infotainment system. Previously, cars had only one infotainment screen, but as technology advances, the number of infotainment screens and their size increases. As a result, infotainment screens have become the focal point for every automaker. The screens are packed with the latest technology capabilities, such as the 2021 Mercedes S-Class, with five touch screens and a central unit with a 12.8-inch OLED screen. Honda has unveiled the new Honda E, which features pillar-to-pillar screens. It includes two 6-inch screens, one with an 8.8-inch TFT screen and two 12.3-inch LCD screens.

Automakers constantly upgrade their infotainment systems to provide their customers with the best features and technologies. Among the most recent launches and models are: Volkswagen announced upgrades to its 2021 vehicle lineup in July 2020, with the MIB3 infotainment system being a significant change. The new MIB3 infotainment system includes wireless App-Connect, multi-phone pairing and improved voice recognition. The MIB3 infotainment system has a redesigned navigation system that includes improved map designs, intuitive route options, quick access to frequently visited locations and advanced route management. SiriusXM's most advanced audio entertainment platform SiriusXM with 360L, is also available on the MIB3.

Geographical Analysis

The growing adoption of interior components in Asia-Pacific

Asia-Pacific is likely to be driven by the small car, which accounts for higher adoption of the interior components. Leading automakers in the region, such as Toyota, Honda and Hyundai, are embracing the benefits of advanced seating systems, lighting, electronics and various safety systems, making them standard features across their vehicle lines. The emergence of EVs (electric vehicles) in major economies like Japan, China and India further support market value.

The region's market is driven by the rising demand for premium interiors, comfort, new and innovative features such as head-up displays and navigation systems and the increasing emphasis on meeting safety standards. This region's major countries, including China, Japan, India and Australia, are expected to adopt new technologies rapidly. China is likely to significantly contribute to Asia-Pacific market growth because of its high vehicle production capacity.

Local players in China are collaborating to create the best interior products. For example, BAIC Yunxiang Automobile Co. Ltd collaborated with ADAYO to develop vehicle infotainment systems. The collaboration will help BAIC Yinxiang build new platforms and restructure the platform production mode for intelligent vehicle manufacturing. Government initiatives in Asia-Pacific, such as subsidies and tax breaks, are enticing automotive OEMs to locate manufacturing plants in the region.

Competitive Landscape

The global automotive interiors market will likely face competition in the coming years due to significant product manufacturers implementing various strategies to gain a competitive advantage, such as focused R&D activities, new product developments, acquisitions, etc. Stahl, for example, acquired BASF's leather chemical business, gaining chemical expertise for its leather chemical business and enabling significant expansion in its offerings. SABIC strengthened its market position by launching its PP compound portfolio, mainly for automotive interior applications.

Key players operating in the global automotive interior market include Adient PLC, Grupo Antolin, Panasonic Corp., Faurecia, Magna International, Toyota Boshuku Corporation, Hyundai Mobis Co., Pioneer Corporation, JVCKENWOOD Corporation and Robert Bosch GmbH.

Panasonic Corp.

Overview: Adient is a global leader in automotive seating, assisting all significant automakers in differentiating their vehicles through superior quality, technology and performance. Adient is a global leader in automotive seating, with more than US$13 billion in sales in FY2021. Formerly known as Johnson Controls Automotive Experience, the company produces and delivers automotive seating for all vehicle classes and significant OEMs, with approximately 75,000 employees working in 208 manufacturing/assembly plants in 33 countries worldwide. Our experience ranges from complete seating systems to individual components and covers every stage of the automotive seat-making process.

Adient is a global leader in every major region of the world. Adient was able to capitalize on the globalization of the automotive industry because of its early investment in emerging markets. Adient is one of China's largest suppliers of just-in-time seating, with nine joint ventures and approximately 33 manufacturing locations spread across 21 cities.

Product Portfolio: The company manufactures complete seats for commercial vehicles, providing intelligent solutions for safety, sustainability, comfort and style. Because design, engineering, manufacturing and assembly are all handled by a single company, it ensures maximum efficiency and consistent high quality.

Key Development: Sage Automotive Interiors (Sage), an Asahi Kasei subsidiary based in South Carolina, U.S. (CEO: Dirk Pieper), has completed its acquisition of Adient plc's automotive fabrics business, as announced on March 5, 2020 (U.S. Eastern Time), for approximately US$175 million (about 18.8 billion at the March 5 Japan time exchange rate of 107.36 per US$). After occupying all necessary regulatory approvals, the transaction was completed on September 30, 2020 (U.S. Eastern Time).

Sage will be able to expand in Europe, the largest market for automotive interior fabric and the source of innovative automotive trends, by combining the automotive fabrics business acquired from Adient, a marketing, manufacturing and development center in Europe, with its own established business.