The global aluminum alloy wheel market demonstrates significant growth potential, with market size valued at USD 14.23 billion in 2020. The market is projected to expand from USD 16.43 billion in 2021 to USD 30.98 billion by 2028, exhibiting a compound annual growth rate (CAGR) of 9.5% during the forecast period. Asia Pacific dominated the global market in 2020, capturing a 44.55% share. The U.S. aluminum alloy wheel market is expected to reach approximately USD 4.31 billion by 2028.
The global pandemic created unprecedented challenges for the aluminum alloy wheel industry. Based on analytical findings, the worldwide market showed 15.5% growth in 2020 compared to average year-over-year growth from 2017 to 2019. The pandemic resulted in negative demand shocks across all regions, impacting manufacturer finances severely. Lockdowns and economic crises created market uncertainties, supply chain disruptions, decreased confidence among businesses, and end-user panic.
The automotive dependency of this industry meant that disruptions in automotive manufacturing directly affected market performance. According to the Society of Indian Automobile Manufacturers, passenger vehicle sales experienced a 2.24% decline from April 2020 to March 2021. China, a major supplier, faced significant challenges during the first six months of 2020, with approximately 1.3 million new passenger cars sold monthly on average, representing a 23% decrease compared to the first half of 2019.
Consumer demand has prompted vehicle manufacturers to focus on safe, luxurious, and lightweight options. According to the U.S. Department of Energy, reducing vehicle weight by 10% can lead to fuel efficiency improvements of 6% to 8%. Vehicle body weight can be reduced by up to 50% by replacing cast iron and steel components with lightweight alloys including magnesium alloy, aluminum alloy, high-strength steel, and carbon fiber. This directly reduces fuel consumption.
Using lightweight components and high-efficiency engines in one-quarter of the U.S. fleet could save over 5 billion gallons of fuel annually by 2030. The high demand for lightweight vehicles and increasing pace of vehicle production establishes positive trends for this market during the profitable period ahead.
Increasing demand from the automotive industry for lightweight materials, combined with heightened focus on fuel efficiency, has significantly increased worldwide demand for efficient vehicles. Aluminum alloy distinguishes itself through its ability to withstand corrosion and rust compared to steel counterparts. Beyond being lightweight, it offers longer lifespan and financial benefits to customers. Customer purchasing approaches during car acquisition have shifted toward luxury due to increased purchasing power and urbanization.
Competition in the manufacturing sector has increased rapidly over the past decade, forcing automobile manufacturers to adopt new technologies. As of 2017, alloy wheel sales for trucks increased by at least 30%. Consequently, wheel sales increased proportionally with growing vehicle sales. Increasing sales and production of all vehicle types in both developing and developed countries, driven by enhanced mobility and transportation sector investments, are expected to strengthen global market revenue growth.
The high cost of aluminum alloy wheels represents a significant growth constraint. Steel and aluminum prices vary based on global demand and supply, iron and bauxite ore availability, and fuel costs. However, steel is generally less expensive than aluminum. Although aluminum is the most abundant metal in Earth's crust, extraction requires substantial electrical power, making it expensive. Manufacturing processes for alloy wheels are more complex than traditional steel wheels. Alloy wheels tend to cost more than steel counterparts, and steel wheel repairs cost considerably less. Therefore, cost factors may restrain market growth.
Refined alloy wheels dominate the global market share due to lower costs. Polished aluminum wheels are refined and not plated. The polishing process involves sanding wheel finishes until the surface becomes completely smooth, then polishing with compounds to create brilliant shine. Polishing adds no weight to wheels, making refined lightweight race wheels more common than chrome/tone lightweight alternatives. Refined wheels can be refinished when finishes become dull or scratched.
Two-tone alloy wheels are expected to exhibit higher CAGR during the forecast period. These wheels provide drive-by appeal to vehicles and enhance aesthetic appearance. The painting process facilitates easier cleaning by users, as any soil or dust sits less firmly on surfaces and can be removed more easily.
The passenger vehicle segment holds the largest market share and is expected to continue during the forecast period. This segment includes sport utility vehicles (SUVs), hatchbacks, sedans, electric vehicles (battery electric vehicles, multi-utility vehicles, hybrid electric vehicles). The commercial vehicle segment is expected to project the highest CAGR during the forecast period, driven by technological advancements in alloy wheel manufacturing and combinations with other materials making wheels tougher and more durable.
Asia Pacific accounted for USD 6.34 billion in 2020 and currently holds the largest market share. Growth is driven by large populations in countries like China and India, representing over 38% of the global population. This growth stems from increased urbanization and rising disposable income leading to evolving personal preferences. According to OICA, India produced 4.51 million automobiles in 2019, with 3.62 million being automobiles. China produced 25.72 million vehicles in 2019, with 21.36 million being cars, establishing it as the largest automobile-producing country.
Europe is expected to be the second-largest stakeholder and likely exhibit the highest CAGR in the global market during the forecast period. North America holds the third-largest position, with the United States ranking first in the region due to major manufacturers' presence.