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A number of factors such as the rising adoption of all-wheel-drive (AWD) vehicles, surging need for enhanced fuel efficiency and road traction, and burgeoning demand for heavy-duty and commercial vehicles will support the automotive differential market growth during the forecast period (2021–2030). According to P&S Intelligence, the market revenue stood at $19,959.3 million in 2020. At present, the increasing electrification of vehicles is becoming a prominent market trend, due to the mounting focus on mitigating vehicular pollution.

The burgeoning need for AWD vehicles, owing to the enhanced safety, drive control, and stability offered by them, will augment the demand for automotive differentials in the coming years. AWD systems were initially used in high-end vehicles, but due to the escalating consumer focus on vehicle safety, automakers are rapidly integrating such systems in passenger cars as well. Additionally, the surging installation of AWD systems in electric vehicles (EVs) will also facilitate the market growth in the foreseeable future. 

Categories under the drive type segment of the automotive differential market include front-wheel drive (FWD), rear-wheel drive (RWD), and AWD/four-wheel drive (4WD). Under this segment, the AWD/4WD category is expected to demonstrate the fastest growth during the forecast period. This will be due to the benefits, such as better traction in slippery conditions, offered by AWD/4WD systems. These benefits help in improving the driving performance and vehicle safety of AWD/FWD-enabled automobiles.

Furthermore, the vehicle type segment of the automotive differential market is divided into commercial vehicle and passenger vehicle. Under this segment, the passenger vehicle category is projected to account for the larger market share in the forecast years. This will be primarily credited to the higher manufacturing rate of passenger vehicles as compared to commercial vehicles. The International Organization of Motor Vehicle Manufacturers (OICA) revealed that in 2020, 55,834,456 passenger cars were produced, whereas only 21,787,126 commercial vehicles were manufactured globally.

Therefore, the burgeoning demand for AWD vehicles and increasing production of passenger cars and commercial vehicles will drive the demand for automotive differentials in the foreseeable future.  

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