Automotive Rubber Demand To Reach US$68.7 Billion By 2030

Automotive Rubber Demand To Reach US$68.7 Billion By 2030 Marking 5.2% CAGR Growth

The automotive industry relies on various raw materials to manufacture cars and auto parts. Rubber especially plays a crucial role in vehicle production because its properties, such as heat and abrasion resistance, make it valuable for various end-use industries. It is extensively used in manufacturing products like tyres, tubes, adhesives, hoses, gaskets, and roll coverings.

Globally, the automotive industry is the significant driver of rubber demand. Modern vehicles contain up to 25 rubber components with as many as 12 different rubber compounds. In tyres, for instance, over 40% of the composition is rubber due to its tear resistance, toughness, and suitability for low-temperature conditions.

 In 2022, approximately 85 million motor vehicles were produced worldwide, marking an increase of around six percent compared to the previous year. According to estimates, the average passenger car tyre contains approximately 9 kilograms of rubber. Considering the number of vehicles produced in 2022 alone, the rubber needed for tyres alone was 3.60 billion kilograms, which shows the high demand for rubber.

These assertions are supported by a recent report showing that the market for automotive rubber-moulded components experienced significant growth, estimated at US$45.8 Billion in 2022 and projected to reach US$68.7 Billion by 2030. Per the report, demand will experience a  CAGR growth of 5.2% during the analysis period of 2022-2030. 

Within the segments analysed in the report, Ethylene Propylene Diene Monomer (EPDM) is expected to exhibit notable growth, with a projected 6.1% CAGR, reaching US$30.3 Billion by the end of the analysis period. The natural rubber segment is estimated to grow at a 5.1% CAGR over the next eight years.

Geographically, the report indicates the US market is leading in demand, estimated at US$9.2 billion in 2022. China follows closely with forecasts showing its market demand for automotive rubber-moulded components will grow at a CAGR of 7.7% to reach US$18.2 billion by 2030.

The report further highlights other significant rubber components markets, including Canada and Japan, which are each projected to grow at 3.7% and 2.3%, respectively, over the 2022-2030 period. In Europe, Germany is expected to grow at approximately 3.9% CAGR. The Asia-Pacific market, led by countries such as Australia, India, and South Korea, is anticipated to reach US$10.7 billion by 2030.

The report correlates with similar reports indicating a growing demand for rubber and its components in the automotive industry. For instance, a different report released in 2020 estimated the global market size at $40.77 billion as of 2019 and projected it would grow at an average CAGR of 5.3% to reach $51.21 billion by 2027.

Following the COVID-19 pandemic, silicone and natural rubber, crucial for tyre manufacturing, faced challenges due to lockdowns and supply chain disruptions. China, a significant consumer and epicentre of COVID-19, experienced inhibited market development. Restrictions on exports and imports further inhibited demand.

According to the IMF, total rubber demand was predicted to rebound by 7.4% in 2021 and moderate to 4.7% in 2022 after the pandemic. At the beginning of 2021, demand for natural rubber spiked, and rubber prices increased due to a quick rebound in China’s tyre manufacturing. 

By May 2021, World Bank data showed that the average price for Rubber RSS3 reached $2.29 per kg, surpassing the 2020 yearly average of $1.73 per kg. The price for Rubber TSR20 rose to $1.69 per kg, with an annual average of $1.33 per kg in 2020.

Going forward, vehicle unit sales are expected to continue growing at a lower rate of about 2% per year. In particular, it is forecasted that by 2030, EVs will represent more than 60% of vehicles sold globally, with the number projected to be almost 350 million vehicles. 

With empirical evidence already showing that EVs have a higher tyre wear rate than their internal combustion counterparts, with studies indicating the tyre wear rate is 20% higher in EVs, we can further expect the demand for rubber and its components to grow strongly.