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RESEARCH REPORTABOUT Automotive

The Global Market for Automotive Turbochargers: 2015 editionFORECASTS AND TRENDS FOR PASSENGER CARS AND COMMERCIAL VEHICLES TO 2020

OCTOBER 2015BY JOHNERIC LEACH

The Global Market for Automotive Turbochargers: 2015 edition iiABOUT Publishing Group

CONTENTS

SUMMARY

ChApteR 1 INtRODUCtION

1.1 Report coverage

ChApteR 2 teChNICAL CONSIDeRAtIONS AND tReNDS

2.1 Introduction 2.1.1 Hybrid turbochargers 2.1.2 Superchargers

2.2 Operating constraints

2.3 Forced Induction Devices 2.3.1 Turbocharging 2.3.2 Advanced turbocharger technologies

2.4 Heavy vehicle turbocharger technologies

2.5 Advanced turbocharger materials and design capability

2.6 Mechanical supercharging

2.7 Technical considerations and trends

ChApteR 3 the GLOBAL MARKet

3.1 Market trends 3.1.1 Regulatory drivers: Emissions regulations and the drive for fuel efficiency 3.1.2 U.S. current and planned regulation 3.1.2.1 Going forward – Volkswagen and the U.S. market 3.1.3 European current and planned regulation 3.1.3.1 Implications – Volkswagen and the market in Europe 3.1.4 Asian current and planned regulation 3.1.5 Additional notes and requirements 3.1.5.1 Tightening emissions standards for commercial vehicles

3.2 Major vehicle production trends

3.3 The downsizing trend

3.4 Diesel market growth

3.5 The heavy-duty sector 3.5.1 Challenges to the diesel engine in the heavy-duty sector

3.6 Market size 3.6.1 The light-duty sector 3.6.1.1 Europe 3.6.1.2 China 3.6.1.3 North America 3.6.1.4 Japan 3.6.1.5 India

The Global Market for Automotive Turbochargers: 2015 edition iiiABOUT Publishing Group

CONTENTS

3.6.1.6 Rest of the world

3.7 The heavy-duty sector

3.8 Market values 3.8.1 Light-duty sector 3.8.2 Heavy-duty sector

3.9 Market shares 3.9.1 Worldwide market – passenger car applications

ChApteR 4 MANUFACtUReRS

4.1 Introduction

4.2 Honeywell Turbo Technologies

4.3 BorgWarner

4.4 Ishikawajima-Harima Heavy Industries (IHI)

4.5 Mitsubishi Heavy Industries (MHI)

4.6 Bosch Mahle Turbo Systems

4.7 Continental Schaeffler

4.8 Eaton

4.9 Cummins Turbo Technologies

4.10 Domestic Chinese turbocharger manufacturers

List of tables

TABLE 1 Projected fleet-wide emissions compliance levels under the footprint-based CO2 standards (g/mi) and corresponding fuel economy (mpg)

TABLE 2 EU emission standards for passenger cars (category M1)

TABLE 3 CO2 emissions and weight in 2011 by manufacturer with 2015 and 2020 CO2 targets (passenger vehicles only)

TABLE 4 China emission limits for China III, IV and 5

TABLE 5 Emission standards for light commercial vehicles

TABLE 6 EU emissions standards for heavy-duty diesel engines: grams per kilowatt/hour (g/kWh)

TABLE 7 EU emissions standards for heavy goods vehicles: Grams per kilowatt/hour (g/kWh)

TABLE 8 Comparison of turbo diesel vs non-turbo petrol

TABLE 9 Comparison of petrol vs non-turbo petrol

TABLE 10 Light vehicle engine production by region to 2020 (million units)

The Global Market for Automotive Turbochargers: 2015 edition ivABOUT Publishing Group

CONTENTS

TABLE 11 Turbocharger demand to 2020 (million units)

TABLE 12 Turbocharger market, medium- and heavy-duty vehicles by region to 2020 (thousand units)

TABLE 13 Light vehicle turbocharger market value by region to 2020 (million USD)

TABLE 14 Commercial vehicle turbocharger market value by region to 2020 (million USD)

List of figures

FIGURE 1 Aeristech electric compressor prototype

FIGURE 2 Centrifugal supercharger

FIGURE 3 Valeo electric supercharger

FIGURE 4 Whipple-type supercharger

FIGURE 5 Roots-type supercharger

FIGURE 6 Passenger car CO2 emissions and fuel consumption, normalised to NEDC

FIGURE 7 Europe turbocharger demand to 2020: Gasoline & Diesel (million units)

FIGURE 8 China turbocharger demand to 2020: Gasoline & Diesel (million units)

FIGURE 9 North America turbocharger demand to 2020: Gasoline & Diesel (million units)

FIGURE 10 Japan turbocharger demand to 2020: Gasoline & Diesel (million units)

FIGURE 11 India turbocharger demand to 2020: Gasoline & Diesel (million units)

FIGURE 12 Rest of the world turbocharger demand to 2020: Gasoline & Diesel (million units)

FIGURE 13 Global market shares for OEM engine turbochargers for passenger car diesel and gasoline engines, 2015 (% volume)

The Global Market for Automotive Turbochargers: 2015 edition 1ABOUT Publishing Group

SUMMARY

The global market for light-duty automotive turbochargers will generate $12.5 billion in revenue by equipping 45.4 million vehicles with turbochargers annually by 2020. This equates to almost 44% of the global light vehicle fleet being equipped with some form of turbocharging. The increase in the light-duty sector will be driven by requirements to achieve continuous improvement in emissions and by the increased adoption of downsizing in emerging markets.

Downsizing facilitates the use of a smaller capacity engine with the ability to boost the performance through the use of a turbocharger. Downsizing has the further benefit of reducing vehicle weight, thereby enhancing fuel economy, whilst improving both thermal efficiency and engine specific output.

Turbocharging is a technology that may readily be employed on both diesel and petrol engines representing a global growth opportunity, even in the limited-growth markets of the U.S., Japan and Europe.

The main growth drivers for the global turbocharger market include:

• Substantial growth in the demand for light-duty turbochargers worldwide, but especially in North America and China, fuelled by the market-wide trend towards engine downsizing;

• Stricter exhaust emission regulations in all the major vehicle markets and the high price of fuel;

• A trend towards even more strict vehicle CO2 emissions globally; and• Further improvements in turbocharger technology, making it even more

attractive to engineers.

In 2014, approximately 67% of new light-duty vehicles in Europe were equipped with turbochargers, the highest level in the world – with the next largest market India having a fitment rate of 46%. This figure will approach 73% by 2020, driven primarily by the trend to downsize and turbocharge petrol engines.

The growth of the turbocharger market in North America will be more dramatic. The trend for larger capacity engines, lower light vehicle diesel engines, and the relatively low cost of fuel has meant the penetration of turbocharging has been relatively slow in comparison to Europe. However, in the coming years turbocharger fitment is likely to accelerate towards European levels and will reach 38% penetration by 2020; though fall-out from Volkswagen’s ‘diesel-gate’ is likely to have some impact on diesel turbocharger numbers. It is too early to speculate at this point the potential impact ‘diesel-gate’ will have on diesel powered vehicle sales without knowing how consumers will react, how VW may compensate owners, and without knowing the fines the EPA may impose. Whilst not every manufacturer is affected, it does suggest an ongoing need to review diesel turbocharger forecasts.

The Global Market for Automotive Turbochargers: 2015 edition 4ABOUT Publishing Group

INTRODUCTION1Since the last edition of this report in 2013, the demand on automakers has been relentless in terms of improving fuel economy and reducing emissions – thus driving increased sales of forced induction systems. Even in the U.S. the EPA forecasts that by 2025, 90% of both combustion and spark engine types will include turbocharging technology.

In general terms, the benefit of forced induction is that increasing the air pressure within the inlet manifold increases the amount of air delivered to the combustion chamber, in turn resulting in higher combustion pressures, thus increasing torque. At the same time it allows more fuel to be burned, thus increasing power and reducing the amount of unburned fuel in the exhaust.

The pressure-charging market is divided between turbocharging, mechanical supercharging and electronic forced induction, each of which has advantages and disadvantages, as discussed in Chapter 2. There have been strong traditional adherents to both technologies, for example with Jaguar, Mercedes-Benz and some American manufacturers using mechanical turbochargers for high specification SI (petrol) engines, while others including BMW, Ford, PSA, Renault and Volvo have favoured turbochargers.

1.1 REPORT COVERAGE

This fifth edition report reviews the key market drivers for forced induction solutions for both the light vehicle and heavy commercial vehicle markets, providing some forward-looking analysis through to 2020.

Chapter two examines current technology drivers and the innovations that have been recently introduced.

Chapter three analyses product trends and fitment levels for automotive turbochargers in each major vehicle-producing region through to 2020. It also provides regional and global volume and value forecasts for turbochargers in both the passenger car and heavy commercial vehicle sectors.

Chapter four provides brief profiles of the major manufacturers of turbochargers, namely BorgWarner, Bosch Mahle Turbo Systems, Continental Schaeffler, Honeywell Turbo Technologies, Ishikawajima-Harima Heavy Industries (IHI), and Mitsubishi Heavy Industries (MHI), Cummins Turbo Technologies, plus an overview of the largest manufacturer of mechanical superchargers, Eaton.

The Global Market for Automotive Turbochargers: 2015 edition

CHAPTER 3 The global markeT

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powerful impact and create a ripple effect, since many countries pattern their regulations on the European standards. Average carbon dioxide emissions from new passenger cars fell below 130 g/km, reaching the target established for 2015 two years early – a demonstration of the effectiveness of the 2009 legislation setting that binding target. According to the European Environment Agency, the exact value was 127.0 g/km. The annual rate of reduction in CO2 emissions from new cars has increased from about 1% prior to 2008 to about 4% since then. Diesel cars accounted for 53.1% of all new vehicle registrations in 2014 suffering a minor drop from a percentage share of 53.3% in 2013. This is still a significant percentage of diesel adoption compared to other major car markets, all of which (with the important exception of India) are dominated by gasoline-powered cars.

Table 2 eU emission standards for passenger cars (category m1*)

Stage Date

Co hC hC+Nox Nox Pm PN #/kmg/km

Compression ignition (Diesel)Euro 1† 1992 Jul 2.72 (3.16) – 0.97 (1.13) – 0.14 (0.18) –

Euro 2, IDI 1996 Jan 1.0 – 0.7 – 0.08 –

Euro 2, DI 1996 Jana 1.0 – 0.9 – 0.10 –

Euro 3 2000 Jan 0.64 – 0.56 0.50 0.05 –

Euro 4 2005 Jan 0.50 – 0.30 0.25 0.025 –

Euro 5a 2009 Sepb 0.50 – 0.23 0.18 0.005f –

Euro 5b 2011 Sepc 0.50 – 0.23 0.18 0.005f 6.0×1011

Euro 6 2014 Sep 0.50 – 0.17 0.08 0.005f 6.0×1011

Positive ignition (Gasoline)Euro 1† 1992 Jul 2.72 (3.16) – 0.97 (1.13) – – –

Euro 2 1996 Jan 2.2 – 0.5 – – –

Euro 3 2000 Jan 2.30 0.20 – 0.15 – –

Euro 4 2005 Jan 1.0 0.10 – 0.08 – –

Euro 5 2009 Sepb 1.0 0.10d – 0.06 0.005e,f –

Euro 6 2014 Sep 1.0 0.10d – 0.06 0.005e,f 6.0×1011 e,g

* At the Euro 1 to 4 stages, passenger vehicles >2,500 kg were type approved as Category N1 vehicles

† Values in brackets are conformity of production (COP) limitsa Until 30 September 1999 (after that date DI engines must meet the IDI limits)b January 2011 for all modelsc January 2013 for all modelsd NMHC = 0.068 g/kme Applicable only to vehicles using DI enginesf 0.0045 g/km using the PMP measurement procedureg 6.0×1012 1/km within first three years from Euro 6 effective dates

Source: The International Council on Clean Transport, ICCT, 2015

In Europe, fuel efficiency R&D has been driven by the imposition of high motor fuel taxes which is reflected in garage pump prices in most European

The Global Market for Automotive Turbochargers: 2015 edition

CHAPTER 3 THE GLOBAL MARKET

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FIGURE 7 Europe turbocharger demand to 2020: Gasoline & Diesel (million units)

0

2

4

6

8

10

12

14

16

18

2014 2015 2016 2017 2018 2019 2020

6.02 6.65 7.10 7.91 8.77 9.49 9.08

7.38

13.38

7.06

13.71

7.1

14.2

7.07

14.98

7.09

15.86

6.71

16.2

7.49

16.57 Diesel turbo

Gasoline turbo

Source: ABOUT Automotive

3.6.1.2 China

Production of turbochargers in China is set to grow dramatically over the next five years. With car ownership rates reaching 5% of the population there is room for growth even if the market has slowed. Naturally aspirated engines will continue to dominate through 2020 in the passenger car market but with an increased focus on emission reduction and fuel efficiency, turbocharged engines will maintain a steady increase. The market share of turbocharged engines in China is expected to grow from 25% in 2015 to over 41% in 2020. The petrol engine dominated the Chinese market with approximately 96% market share in 2015, although following European and Japanese rather than U.S. trends, with average engine displacement of 1.8-litres and four cylinders. Turbo-diesel penetration in China remains at negligible levels, with less than 2.5% of the light vehicle market in 2015.

Foreign OEMs, including Volkswagen and General Motors, championed the launch of turbocharged engines on to the Chinese market. BMW, Daimler-Benz, Ford, and PSA are also expected to follow suit within the next two years as consumers appreciate the advantages of turbocharging. In November 2014, BorgWarner announced that it was supplying its advanced turbocharging technology for Volkswagen’s four-cylinder gasoline engine for the Chinese market. The Chinese OEMs Brilliance, BYD Auto, Changan, Chery, Dongfeng, FAW, Geely, Great Wall, and SAIC Motor, are all developing turbocharging technology for their new gasoline engines. But it is in diesel engines where turbochargers are most prevalent, with most in Greater China featuring turbocharging or variable turbocharging technology. Geely’s EC7 was refreshed in 2014 with a 1.3-litre turbocharged engine replacing the model’s previous 1.5-litre and 1.8-litre naturally aspirated engines.

8

10

12

14

16

7.38

13.38

7.06

13.71

7.1

14.2

7.07

14.98

7.09

15.86

6.71 7.49SAMPLE0

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6

2014 2015 2016 2017 2018 2019 2020

6.02 6.65 7.10 7.91 8.77 9.49 9.08

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The global market for automotive turbochargers: 2015 editionForecasts and trends for passenger cars and commercial vehicles to 2020

Since the last edition of this report in 2013, the demand on automakers has been relentless in terms of improving fuel economy and reducing emissions – thus driving increased sales of forced induction systems. The use of pressure charging techniques has therefore expanded significantly, and the number of applications has continued to grow. What we have seen in recent years is the ascendancy of the turbocharger and its use by almost every major manufacturer, as well as the adoption of new arrangements that combine turbocharger and supercharger technologies to deliver characteristics superior to what either technology could deliver individually.

This exclusive report from ABOUT Automotive provides fresh, unbiased insight in a number of areas, including:• The substantial growth in the demand for light-duty turbo-

chargers worldwide, but especially in North America and China, fuelled by the market-wide trend towards engine downsizing;

• Stricter exhaust emission regulations in all the major vehicle markets and the high price of fuel;

• The trend towards even more strict vehicle CO2 emissions globally;• The state of the diesel market worldwide – from the growth

of clean diesel in North America, to the political backlash in Europe; and

• Further developments in turbocharger technology, such as the increasing cost of high temperature resistant materials.

Published: October 2015 Price: £495 (single-user licence) No. pages: 90 Format: PDF

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Report coverageThis fifth edition report reviews the key market drivers for forced induction solutions for both the light vehicle and heavy commercial vehicle markets, providing some forward-looking analysis through to 2020.Chapter two examines current technology drivers and the innovations that have been recently introduced.Chapter three analyses product trends and fitment levels for automotive turbochargers in each major vehicle producing region through to 2020. It also provides regional and global volume and value forecasts for turbochargers in both the passenger car and heavy commercial vehicle sectors.Chapter four provides brief profiles of the major manufacturers of turbochargers, namely BorgWarner, Bosch Mahle Turbo Systems, Continental Schaeffler, Honeywell Turbo Technologies, Ishikawajima-Harima Heavy Industries (IHI), and Mitsubishi Heavy Industries (MHI), Cummins Turbo Technologies, plus an overview of the largest manufacturer of mechanical superchargers, Eaton.

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NEW DATA FOR THE 2015 EDITIONAll regional forecast data are now split between gasoline and diesel engines

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