The increasing sales of commercial and passenger vehicles, especially flex-fuel vehicles that allow end users to choose customised biofuel-fossil fuel blends, are expected to drive the consumption of automotive biofuels around the globe. The enforcement of higher biofuel percentage blend mandates will spur use of solutions higher than the standard E10 ethanol blend, adding to biofuel demand.
New analysis from Frost & Sullivan, Strategic Analysis of the Global Automotive Biofuels Market, finds that the market generated revenues of $94.61 billion in 2013 and estimates this to reach $149.25 billion in 2018. The study covers automotive biodiesel and ethanol.
The United States remains the primary producer and consumer of automotive ethanol, followed by Brazil and China. However, higher vehicle fuel efficiency has reduced gasoline consumption in the United States and created an ethanol blend wall, restraining the market from reaching its potential. Nevertheless, the country will provide ample growth opportunities for cellulosic ethanol manufacturers.
“The biodiesel industry is likely to stay strong in North America as well as in Latin America, although Europe will continue to be the primary consumer and producer of biodiesel,” said Frost & Sullivan Chemicals, Materials and Food Research Analyst Shray Sharma. “Asia-Pacific will be the fastest-growing market for both automotive ethanol and biodiesel.”
Access to competitively-priced feedstock will be crucial for biofuel manufacturers to sustain profits across regions in the midst of raw material price fluctuations. Hence, they need to scout for backward integration opportunities. Biodiesel producers must also look for low-cost feedstock options such as animal fat and recycled oil to fight rising production costs.
Another challenge for vendors is the lack of awareness among end users, many of whom are concerned that biofuels may damage vehicle engines. It is estimated that fewer than 10 percent of the total 10.6 million flex-fuel vehicles on the road in the United States use the higher E85 ethanol blend. Price subsidies for fossil fuels too remove the financial incentive for a consumer to use biofuels.
“Manufacturers must expand end-user awareness through branding and marketing campaigns for improved blended fuels,” suggested Sharma. “Ensuring proximity to customers and establishing partnerships with efficient distribution and retail networks will also be competitive factors for companies seeking to expand export portfolios in the global automotive biofuels market.”
Strategic Analysis of the Global Automotive Biofuels Market is part of the Chemicals & Materials (chemicals.frost.com) Growth Partnership Service program. Frost & Sullivan’s related studies include: Global Lubricant Additives Market, Plastics in Automotive Glazing Market in Western Europe and North America, Global Electric Vehicles Lithium-ion Batteries Chemicals and Materials Market, and Global Industrial Greases Market and Opportunities for Bio-based Materials. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Strategic Analysis of the Global Automotive Biofuels Market / MA72-39