Emerging Opportunities for Chemicals and Materials in Transportation


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- Learn about the key trends influencing the transportation sector
- Understand the impact of these mega trends on the chemicals demand in the automotive sector
- Identify the specific application segments within the automotive industry that are poised for high growth, such as plastics as an enabler of vehicle light-weighting

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Emerging Opportunities for Chemicals and Materials in Transportation

  1. 1. Emerging Opportunities for Chemicals andEmerging Opportunities for Chemicals and Materials in TransportationMaterials in Transportation Mega Trends to Trigger New Product DevelopmentMega Trends to Trigger New Product Development Analyst BriefingAnalyst Briefing 2626thth March 2014March 2014
  2. 2. Today's Presenters Soundarya Shankar Research Analyst Frost & Sullivan K. Deepan Kannan Industry Manager Frost & Sullivan 2 • Chemicals & Materials • Company expert on lightweight materials, paints and coatings • Recent experience in researching lubricants • Chemicals and Materials in Transportation • 7 years' research experience at Frost & Sullivan
  3. 3. Our Chemicals Market Approach Focus on end-markets and mega trends Functionality and performance Health and wellness Food Drugs & Cosmetics Each Mega Trend affects the use of chemicals in Transportation differently 3 Globalisation Low carbon economy Construction & Utilities Transportation Source: Frost & Sullivan analysis
  4. 4. Introduction Mega Trends Impact a Range of Chemical Markets in Transportation Lightweight Materials Engineering Plastics and High Temperature Plastics Biofuels and Lubricants 4 Advanced Coatings & Adhesives Tires Fibres and Automotive Textiles High Speed Rail, Marine, Aerospace Source: Frost & Sullivan analysis
  5. 5. Chemicals and Materials in Transportation Automotive applications are the largest transportation sector for chemical companies. • For many individual product groups, automotive applications represent 50 to 75% of total usage across all transportation applications. o Other transportation applications include heavy commercial vehicle, bus, rail, aerospace and marine. Aerospace The global automotive industry represented a market of approximately $70 billion for chemicals 5 Chemicals and Materials in Transportation Automotive Heavy Commercial Vehicles Bus and Rail Marine market of approximately $70 billion for chemicals & materials companies in 2013. Within automotive applications, many products are further subdivided into use by original equipment manufacturers (OEMs) and in the aftermarket. Source: Frost & Sullivan analysis
  6. 6. Chemicals and Materials Used in Transportation Feedstock Lubricants and Fuels Polymers Additives Fibres and Reinforcements Functionality and performance Health and wellnessChemicals and Materials in Transportation 6 Thermoplastics and Thermosets Paints and Coatings Adhesives and Sealants Textiles Tire Materials and Chemicals Composites Elastomers and Rubbers Globalisation Low carbon economy Source: Frost & Sullivan analysis
  7. 7. Globalisation Trends in Automotive Development of road infrastructure Changes in the world at large Increasing urbanisation will change the types of vehicles needed. Chemicals and Materials in the Automotive Market: Summary of Individual Globalisation Trends Social Globalisation Factors Globalisation within the Automotive Industry Supply chain Vehicle design and engineering OEMs increasingly have design centres in multiple regions around the world. Globalisation 7 Changes in buyer demographics Middle classes in developing economies are growing. Development of road infrastructure Better road infrastructure will increase vehicle demand. Changes in buyers’ desires Despite the global standardisation of design, consumers still want more personalised vehicles. Manufacturing Despite the globalisation of car assembly, local factors still matter. Supply chain Vehicle industry supply chain and platform strategy are increasingly globalised. Aftermarket Globalisation of standards prompt changes to aftermarket product requirements. Source: Frost & Sullivan analysis
  8. 8. Impact of Globalisation Trends on the Chemical Industry Overall Level of Impact Urbanisation Supply chain Manufacturing Aftermarket RelevanceofChemicals Chemicals & Materials in Transportation: Criticality and Relevance of Globalisation Trends, Global, 2012–2020 8 Note: External global factors are shown as blue points. Globalisation trends within the automotive industry are shown as green points. Source: Frost & Sullivan analysis Infrastructure Demographics Personalisation Design RelevanceofChemicals Rate of Globalisation
  9. 9. Health & Wellness Trends in Automotive Impact of health and wellness as a megatrend can be seen as a function of increased safety, comfort and health features in passenger cars HealthSafety Comfort Wet Grip and Low Rolling Resistance Tires All weather grip tyres design is gaining NVH Materials Growing demand for NVH materials create opportunities for hot melt Low Emission Materials and Coatings 9 All weather grip tyres design is gaining interest. Focus will be on to develop tires with a balance of wet grip, ice/snow traction and rolling resistance values. This will create opportunities for innovative rubber formulations and tread design. Flexible Design and Smart Airbags Textile materials to enable longer inflation of airbags for enhanced protection during rollovers of the vehicles in the event of accidents. New textiles and coating materials for easier design and assembly of airbags. Smart airbags that avoid collision altogether is a likely development in passenger safety. create opportunities for hot melt adhesives. Hot melt adhesives are also preferred as a replacement for solvent-based ones to eliminate any residual odor. Developing PU foams in seating applications that contribute to noise and vibration reduction. Automotive Glazing The trend towards larger glazing areas has created opportunities for specialty coatings and films, that give protection from infrared and ultra-violet radiation. Low emission plastics to be used in interior applications. Trend towards waterborne coatings from solvent borne to improve the interior air quality of the vehicle. Focus on allergen-free materials such as Acella® Eco Green from Benecke-Kaliko, used in interior applications. Source: Frost & Sullivan analysis
  10. 10. Functionality & Performance Trends in Automotive Focus on functionality and performance of the automotive vehicles by OEMs has given rise to opportunities for chemical companies Improved Performance and Reduced Maintenance • Increased opportunities for high performance lubricants. • Improved performance characteristics such as durability, thermal, corrosion and chemical resistance have led to the increased the penetration of powder coatings. • Powder coatings also aid in reducing the number of coating layers. Advanced Engine Technologies Durability Requirements Parts consolidation • High performance materials enable OEMs and component 10 Greater design flexibility Parts consolidation Easy processability • High performance materials enable OEMs and component manufacturers by offering improved flexibility and design freedom. • Radiation-cured coatings, quick drying systems and coatings that reduce throughput for the body shops will gain focus. Specialty Appearanc e Care Extended vehicle life Innovative car care solutions • Innovative products such as self healing coatings and scratch resistant films. • Advancements in refinish coatings will require reformulation of car care chemicals to keep pace with the developments. Greater Design Flexibility Specialty Appearance Care Source: Frost & Sullivan analysis
  11. 11. • Choice of plastics and composites over metals has proven to offer 50.0% weight reduction along with a 25.0-30.0% savings in fuel consumption. Furthermore, 1Kg weight reduction aids in reducing CO2 emissions by 20 Kg. • Plastic and composite manufacturers are working closely with automotive OEMs and component manufacturers to develop lightweight solutions in the marketplace. • Rapid substitution of metal by plastics have steered the use of adhesive and sealants in the automotive industry. Low Carbon Economy Trends in Automotive • The European parliament and Council Directive 2000/53/EC has taken initiatives to collect, store, treat, reuse and recycle end of life vehicles. • The directive mandates its member states to achieve a recovery and recycling target of 95% by 1st January 2015. It further places limits on the amount of heavy metals/other hazardous substances in the ELV Light Weighting Materials Material Recycling Trend 11 automotive industry. • The European commission as well as the US ozone commission model has set limits for VOC emissions from automotive refinish coatings. Water-borne and high solids solvent borne coatings are therefore poised to witness strong growth. • In the automotive OEM coatings market, powder coatings are gaining momentum due to superior environmental profile. • Automotive OEMs are relentlessly focussing on increasing the use of bio plastics to enhance the environmental footprint of the vehicle. Furthermore, regulatory bodies are striving to accelerate the share of recycled plastics. • Bio-based and biodegradable lubricants are becoming increasingly important in applications such as wheel bearings, chassis, steering linkages, where lubricants come in direct contact with the environment. Use of Bio- based Materials Sustainable Coating Technologies Source: Frost & Sullivan analysis
  12. 12. Why Light weighting? Vehicle Weight Reduction Trend in the Automotive Industry 1500 2000 1850 kg 1810 kg (0.79) %CAGR 1730 AverageVehicleWeight (kg) 10.0% reduction in vehicle weight offer 3-4% fuel savings This equates to 0.46 l of 12 1000 1500 2002 2004 2006 2008 2010 2012 USA EUROPE 1282 kg 1250 kg (0.68%) CAGR 1200AverageVehicleWeight (kg) Year Increase in small car demand to drive down average vehicle weight, with a reduction of 8 to 15 kg year on year in the United States and Europe This equates to 0.46 l of gasoline saved per 100 km driven for each 100 Kg of mass reduced This offers savings in CO2 emissions of 25.3 Kg for each kilogram of weight reduced over the life of the vehicle Source: Frost & Sullivan analysis
  13. 13. Evolution of Weight Reduction by OEMs Vehicle Weight Reduction Versus CO2 Emission (Europe), 2010 and 2017 13 Automotive Plastics Market: Plastic and Composite Content per Vehicle (World), 2007-2017 Automotive Plastics Market: Plastic and Composite Content as Percent of Vehicle Weight (World), 2007-2017 106.8 109.4 111.9 114.7 118.0 121.2 124.5 127.8 131.1 134.5 137.5 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PlasticsQuantityperVehicle(Kg) 7.4% 7.7% 8.0% 8.1% 8.2% 8.4% 8.7% 8.9% 9.1% 9.4% 9.6% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PlasticsQuantityas PercentofVehicle Weight(%) Source: Frost & Sullivan analysis
  14. 14. Dynamics in Automotive Light weighting 4.0 5.0 6.0 7.0 PP PC PU ABSBlends CAGR(%) Metal Two or more plastics competing for the same application Substitution of Total Automotive Plastics Market: Growth Opportunity Matrix, Europe, 2009–2019 Substitution Trends in Automotive Applications 14 0.0 1.0 2.0 3.0 4.0 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0 Other Compounds PA HPP Note: Bubble size indicates the growth of the segment. Revenue (€ Million) UnitShipmentCAGR(%) Materials in Automotive Applications replacement by plastics and composites Substitution of plastics by composites Source: Frost & Sullivan analysis
  15. 15. Material Recycling in Automotive Plastic Recycling At the end of vehicle life, automotive components are dismantled for recycling and are used to manufacture new automotive components. Plastics used in consumables such as plastic bottles are also used to develop automotive components. Recycling plastics not only contribute to CO2 emission reduction but also aid in preventing the ejection of sensitive substances such as lead, mercury and oil into the environment. Catalyst Recycling/Regeneration Catalysts used in emission control catalyst technologies are poisoned and recycling them offer significant cost savings, especially because precious metals are used in these applications Several patented state of art technologies have been developed to recycle and reuse catalysts used in catalytic converters. With Approximately 12.6 million vehicles recycled each year, GHG emission are reduced up to 30 million metric tons every year. 15 lead, mercury and oil into the environment. Automotive Fluids Recycling Automotive fluids present significant opportunities for recycling. According to the automotive recyclers association, current level of fluid recycling is as follows 100.8 million gallons of gasoline and diesel fuel 24 million gallons of motor oil 8 million gallons of engine coolant 4.5 million gallons of windshield washer fluid. Other Material Recycling Federal Government has made initiatives to recover lead from used batteries and 95% of battery cases are recycled. New tires are manufactured using 10% of recycled rubber material while rubber from used tires are also used for brake pedals and floor mats. Recycling Trends Source: Frost & Sullivan analysis
  16. 16. Conclusion Functionality and Performance Health and Wellness Chemical companies need to focus on the convergence between mega trends for the development of new products Countries such as China are the highest- growth markets for luxury car brands, such as Ferrari and Land Rover. Focus on powder coatings address both the durability requirements and also contributes to sustainability Countries such as China 16 Source: Frost & Sullivan analysis Low-carbon Economy Globalisation Waterborne coatings addresses health as well as reducing the impact of chemicals on environment Rover. Waterborne coatings addresses health as well as reducing the impact of chemicals on environment Need for low carbon economy is a global trend, which is boosting interest in lightweight design from Asia Countries such as China are the highest-growth markets for luxury car brands, such as Ferrari and Land Rover.
  17. 17. Research Studies Recently Published Light-weighting Role of Performance Plastics in the European Automotive Market Strategic Analysis of the Global Lubricant Market and the Impact of Bio-based Feedstock Global Markets for Adhesives and Coatings in High- speed Rail Global Analysis of the Automotive Refinish Coatings Market Upcoming Global Markets for Biofuels Analysis of the European Fuel Additives Market Global Automotive Adhesives and Sealants Markets Strategic analysis of the Global Fibers Market for the Automotive Sector Strategic Analysis of the Global Tires Market 17 Market Analysis of the Global Advanced Aerospace Coatings Market Analysis of the North American and Western European High Heat Thermoplastics Market Global Opportunities for Plastics and Composites in High Speed Rail Strategic Analysis of the Global Tires Market APAC Automotive Coatings Outlook Global Automotive Adhesives and Sealants Markets Global Lubricant Additives Market Strategic Analysis of the Global LED Materials Market Automotive Paints and Coatings in Brazil and Mexico The Global Elastomers Market
  18. 18. Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community 18 Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Phone: 1-877-GOFROST (463-7678) Email: myfrost@frost.com
  19. 19. Your Feedback is Important to Us Growth Forecasts? Competitive Structure? What would you like to see from Frost & Sullivan? 19 Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation.
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  21. 21. For Additional Information Deepan Kannan Global Program Manager Chemicals in Transportation (91) 44-66814070 deepank@frost.com Soundarya Shankar Research Analyst Chemicals & Materials (91) 44-66814068 soundaryas@frost.com 21 Bernard Weber Sales Director, Europe Chemicals, Materials & Food (44) 20 7343 8352 bweber@frost.com Mark Hicks Sales Director, N America Chemicals, Materials & Food (1) 210 247 2490 mark.hicks@frost.com