Internal Combustion Engine Market Trends

Market Driver - The Rapid Expansion of the Automotive Sector Globally, Driving Demand for Internal Combustion Engines (ICEs)

With the rapid rise in automobile production and vehicle fleet expansion witnessed across both developed and emerging economies worldwide, there has been a significant increase in the demand for internal combustion engines that power these vehicles. The automotive industry has seen exponential growth over the past few decades, especially in the large developing nations of Asia, South America and Central/Eastern Europe.

The robust economic growth and rising disposable incomes in these regions have translated to more individuals being able to purchase personal vehicles. This has not only lifted the sales figures of automakers but has also fueled the production of ICEs that are installed in millions of new cars, buses, trucks and two-wheelers manufactured annually. Developing countries like China, Brazil and India today represent the biggest automotive markets globally and their continued motorization and infrastructure growth will ensure steady requirements for gasoline and diesel engines in the foreseeable future.

Even in prosperous nations where vehicle penetration levels are already quite high, automakers are continuously trying to expand their market share by refreshing their model lineups frequently and introducing new products to attract both new and existing customers. While there is increased focus on electric vehicles in developed markets, traditional ICE technology still accounts for the bulk of automotive production currently. The thriving pre-owned car industry in developed economies too depends largely on the internal combustion engine, extending its lifecycle impact.

With urban population growing rapidly, mass public transportation systems are struggling to cope. This has led to more personalized mobility solutions being adopted, augmenting the demand for motor vehicles. Commercial transportation activities related to freight movement and logistics have also intensified worldwide. All of these trends portend lasting momentum for the internal combustion engine industry as the mobility needs across the world continue their positive trajectory.

Market Driver - Growing Demand for Low-Emission Engines Due to Increased Focus on Reducing Carbon Emissions

Fueled by rising environmental consciousness and the threat of climate change, there is a palpable policy push globally towards lowering vehicular emissions and improving fuel efficiency standards. Various governments have implemented stringent regulations for carbon dioxide, nitrogen oxide and particulate matter emissions from internal combustion engines used in automobiles in a phased manner. This has compelled automakers to engineer their gasoline and diesel powertrains to meet the tightening emission norms within given timeframes.

Original Equipment Manufacturers (OEMs) have invested heavily in developing advanced emission control technologies like gasoline particulate filters, selective catalytic reduction systems, exhaust gas recirculation valves and lean NOx traps to help engines comply with the regulatory emissions thresholds. They have also optimized engine calibration, turbocharging and introduced mild- and full-hybrid powertrain derivatives to enhance efficiency and reduce consumption. Moreover, the proliferation of low-sulfur fuels to facilitate advanced after-treatment devices has encouraged automakers to design innovative low-emission engines.

While transitioning to electric and other alternative fuel-powered vehicles will take time, refining the internal combustion engine still remains pivotal in the short-to-medium term to lower the road transport sector's carbon footprint. Growing public discourse around climate issues has made driver preferences evolve, where emissions and ‘eco’ credentials carry higher significance while purchasing decisions. This translates to robust opportunities for engine manufacturers focusing on rapid development and large-scale production of cleaner and greener combustion technology compatible options. The impetus on decarbonization will hence sustain the need for low-emission engines compliant with evolving emissions norms across geographical markets in the foreseeable future.

Market Challenge - Rising Environmental Concerns and the Shift Towards Greener Alternatives Like Electric Vehicles.

One of the major challenges facing the internal combustion engine market is the rising environmental concerns and the shift towards greener alternatives like electric vehicles. There is growing awareness among consumers about the role of vehicular emissions in air pollution and climate change. Strict emission norms implemented by various governments are also putting pressure on automakers to reduce emissions from gasoline and diesel engines. At the same time, support for electric vehicles is increasing through subsidies and policy push in many countries as they offer a cleaner alternative with zero-tailpipe emissions. The traditional dominance of internal combustion engines is facing a serious threat as customers are willing to pay more for electric vehicles to do their bit for the environment. While efforts are on to develop more efficient engines, they may not be enough to match up to the eco-friendliness of battery-powered electric vehicles. This changing landscape poses a long-term challenge for combustion engine manufacturers to adapt their technologies and business models or see their market share erode gradually.

Market Opportunity- Rising Adoption of Cutting-Edge Technologies Creates Novel Opportunities for Further Market Developments

One important opportunity in the internal combustion engine market is the rising adoption of cutting-edge technologies to improve efficiency, such as low-temperature combustion engines. Automakers and technology companies are continuously investing in research and development to enhance the performance as well as reduce emissions and improve fuel efficiency of gasoline and diesel engines. This includes development of more sophisticated direct injection, turbocharging and downsizing technologies. In addition, there is a lot of focus on novel combustion concepts such as homogeneous charge compression ignition and premixed charge compression ignition which help achieve ultra-low nitrogen oxide and particulate matter emissions while improving thermal efficiency. Wider commercialization of these technologies in the coming years can boost engine efficiency significantly and help internal combustion engines meet stringent emission norms across major markets. Their successful implementation will support continued strong demand for combustion engine vehicles.