Fuel Additives Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

Fuel Additives Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The Fuel Additives Market size is expected to grow from 1.94 million metric tons in 2023 to 2.48 million metric tons by 2028, at a CAGR of 5.06% during the forecast period (2023-2028).

The COVID-19 pandemic negatively impacted the market. This was because of the shutdown of the manufacturing facilities and plants due to the lockdown and restrictions. Supply chain and transportation disruptions further created hindrances for the market. However, the industry witnessed a recovery in 2021, thus rebounding the demand for the market studied.

Key Highlights

• Over the medium term, increasing consumption of fuel and rising environmental concerns are some of the factors driving the growth of the market studied.
• On the flip side, increasing demand for battery electric vehicles (BEVs) in countries such as the United States, China, and Germany may hamper the market's growth during the forecast period.
• However, the accelerating demand for ultra-low-sulfur diesel (ULSD) is likely to act as an opportunity for market growth in the future.
• North America dominated the fuel additives market, owing to the high demand from various applications.

Fuel Additives Market Trends

Gasoline to Dominate the Market Studied

• Gasoline is the major application of fuel additives in terms of market share. The technologies and fuels used in gasoline engines constantly evolve and pose new challenges. The rise in gasoline additive consumption is largely due to engine design requirements and refinery operation advancements. Furthermore, the cost of the additive is less than 0.3% of the average retail gasoline price.
• The growing popularity of newer fuel delivery systems, such as gasoline direct injection (GDI), is expected to increase demand for fuel additives.
• Previously, port injection fuel delivery systems were the norm. On the other hand, new gasoline direct injection (GDI) technology is becoming standard equipment on many new cars, particularly high-performance vehicles. The injector in this innovative fuel delivery system is placed inside the combustion chamber, resulting in improved combustion, better gas mileage, and lower emissions. Deposits in GDI systems are extremely difficult to remove and require additional fuel additives.
• The market penetration of gasoline direct injection (GDI) engines is rapidly increasing, significantly driving the demand for fuel additives. Approximately 75% of all vehicles manufactured by the largest manufacturers are made with GDI engines. Some manufacturers include Audi, BMW, Buick, Chrysler-Jeep Wrangler, Ford, Honda, Hyundai, Infiniti, Kia, Lexus, Mazda, Nissan, Saab, Subaru, and Volkswagen. For instance, according to Volkswagen's annual report, the Volkswagen Group produced some 8.7 million motor vehicles in 2022, which showed an increase of 5.24% compared to 2021. Therefore, increasing production of GDI-engine automobiles is expected to create upside demand for the fuel additives market.
• Hence, owing to the reasons mentioned above, gasoline-related applications of fuel additives are likely to account for the highest market share during the forecast period.

North America to Dominate the Market

• The United States dominated the fuel additive market in the North American region. The United States is one of the fastest-emerging economies and has become one of the biggest production houses in the world today. The country’s manufacturing sector is one of the major contributors to the country’s economy.
• The United States is one of the world’s largest and most powerful economies. According to the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) increased at an annual rate of 1.1% in the first quarter of 2023. In the fourth quarter of 2022, real GDP increased by 2.6%. The increase in the first quarter was primarily due to higher consumer spending, which a decline in inventory investment partially offset.
• The significant rise in gasoline prices in the United States lowered gasoline usage. For instance, according to the Energy Information Administration, gasoline consumption in the United States amounted to some 8.7 million barrels per day in October 2022, which showed a decrease of 5% compared to October 2021. Therefore, a decrease in gasoline consumption in the country is expected to affect the market's growth.
• Most of the country's farm and construction equipment runs on diesel fuel. The military uses Diesel fuel in tanks and trucks because it is less flammable and explosive than other fuels. Diesel fuel is also used in diesel engine generators to generate electricity, as diesel generators are the primary source of electricity in the majority of Alaska's remote villages.
• Moreover, the United States is the second-largest vehicle sales and production market globally. For instance, according to OICA, in 2022, automobile production in the United States amounted to 1,00,60,339 units, which showed an increase of 10% compared to 2021. As a result, an increase in automobile production is expected to create upside demand for the fuel additive market.
• Additionally, the government is actively involved in promoting the use of electric vehicles through programs and initiatives. This has significantly boosted the usage of electric vehicles and affected fuel consumption. ​
• Over the last few years, consumers have perceived electric vehicles (EVs) as a far more appealing option due to their increased range, battery life, variety of models, and affordability. Therefore, the electric vehicle market has grown fast in recent years and is forecast to expand to USD 1.4 trillion in 2027. For instance, in the second quarter of 2022, just under 196,800 battery-electric vehicles were sold in the United States. This was a year-over-year increase of around 66.4 percent compared to the sales recorded in the second quarter of 2021. Therefore, increasing sales of electric vehicles are expected to affect the consumption of fuel additives.
• The United States has the largest aerospace industry in the world. According to the Federal Aviation Administration (FAA), the total active general aviation fleet is expected to increase from 204,405 aircraft in 2021 to 204,925 aircraft by 2027, owing to the growth in air cargo.
• All these factors, in turn, have an impact on the consumption of fuel additives during the forecast period. ​

Fuel Additives Industry Overview

The fuel additives market is fragmented in nature. The major players in this market (not in any particular order) include Afton Chemicals, The Lubrizol Corporation, Innospec, Chevron Corporation, and BASF SE, among others.

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