Market Trends of Hydraulic Fluid Industry
Decline in Automotive Industry to Impact the Market
- In the automobile industry, hydraulic fluids are used in applications such as brakes, clutches, and power steering systems. Brake fluids, clutch fluids, and power steering fluids are some of the forms of hydraulic fluid used in the automobile sector. These fluids help in creating force (transfer of kinetic or potential energy) and protect against wear on the surfaces in contact.
- These fluids need regular maintenance and need to be changed at regular intervals. It drives the demand for hydraulic oil from the aftermarket. For instance, if the quantity of the brake oil is lower than the required limit, the flow is disturbed, and the braking power is lowered.
- According to the International Organization of Motor Vehicle Manufacturers (OICA), global motor vehicle production reached 85,016,728 units in 2022. The production increased by 5.9% when compared to the previous year's data, and motor vehicle production grew year-on-year between the 2021 and 2022 markets by 6%.
- Similarly, as per OICA, commercial vehicle production reached 57.49 million units in 2022 and registered growth when compared to 56.44 in 2021.
- Meanwhile, as per the Bureau of Economic Analysis of the United States Department of Commerce, light vehicle retail sales reached 13,754.3 thousand units. It registered the lowest production when compared to 14,946.9 thousand units in 2021.
- Further, according to the German Association of the Automotive Industry (Verband der Automobilindustrie), automobile production in Germany reached 3.4 million in 2022 and registered a growth of 9.6% when compared to 3.1 million in 2021.
- Hence, owing to the factors mentioned above, the market is expected to witness growth during the forecast period.
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Asia-Pacific to Dominate the Market
- The Asia-Pacific region is expected to dominate the hydraulic fluids market during the forecast period. This trend is attributed to the growth of the industrial sector in the region, which is creating new investment opportunities.
- China is the largest manufacturer of automobiles in the world. The country's automotive sector is shaping up for product evolution, with the country focusing on manufacturing products. It is to ensure fuel economy and minimize emissions (owing to the growing environmental concerns due to mounting pollution in the country).
- According to the China Association of Automobile Manufacturers(CAAM), in 2022, approximately 23.56 million passenger cars and 3.3 million commercial vehicles were sold in China.
- Construction equipment requires a lot more energy to operate than industrial equipment. Hydraulic fluid contributes towards energy efficiency by enduring greater mechanical stress and operating in harsher conditions than its industrial counterparts.
- In 2022, the Chinese construction industry was valued at about USD 1,239 billion. It increased from USD 1,191 billion in 2021, registering a growth rate of around 4%.
- There are various new construction projects in Japan. In 2022, the construction industry generated sales of approximately JPY 149.8 trillion (~USD 1.01 trillion). It represented an increase of 9.6% compared to the previous fiscal year.
- Residential and commercial construction in India is increasing, owing to the developing service sector in the country. According to the Ministry of Housing and Urban Affairs, the Indian government announced an investment of around USD 27.54 billion for the construction of 100 cities under the Smart Cities plan. This plan includes 5,151 different smart city projects. Under the Union Budget for Fiscal Year 2022, the Smart Cities Mission in India was allocated INR 6,450 crore (~USD 868 million) as compared to INR 3,400 crore (~USD 457 million) in Fiscal Year 2021.
- The Chinese aerospace industry is one of the leading industries in the country, and the government is heavily investing to increase its domestic manufacturing capabilities. Moreover, through the next 20 years, Chinese airline companies are planning to purchase around 7,690 new aircraft valued at around USD 1.2 trillion.
- Therefore, the factors above are expected with a significant impact on the market in the coming years.
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