The Regulatory Changes Open New Vistas of Growth in Airbag Yarn Market

According to WHO, each year, around 1.3 million people perish in road accidents. Estimates of various other organizations reveal that every year global economy suffers a loss of about half a trillion dollars due to road accidents. Nothing can be done to avoid economic loss, but lives can certainly be saved. Europe has shown remarkable success in reducing fatalities by around 50% over the decade and a part of the reason was the inculcation of frontal airbags in all vehicles and it stands out as a beacon of inspiration.

In the past five years, the world learned that a device that is meant to save lives can also take them. Takata’s faulty airbag inflators took many lives. It was no less a revelation that a seemingly trivial component of a big machine like a car, is equally significant and critical when it comes to saving lives.

An airbag consists primarily of three components an airbag module (airbag inflator and airbag), crash sensors, a diagnostic monitoring unit. The airbag fabric is a critical component of the airbag system.

The history of airbag development dates back to 1953, but its commercialization happened only after the US federal law inculcated airbags in safety standards i.e. in the 1980s. From then on, the spread of airbags has been catalyzed time and again by changes in regulations. Even today, the changes in regulations in China and India shall boost the airbag and airbag yarn market in a substantial way.

The main requirements in airbag fiber materials are high strength, heat stability, good aging characteristics, energy absorption, coating adhesion and functionality at the extreme hot and cold condition. Apart from the basic properties, the choice of yarn is also influenced by its application, whether it is used as Driver Airbag, Passenger Airbag, Side airbag, Knee Airbag or Curtain airbag.

Polyamide Vs Polyester

Airbags are made of a compact, plain woven fabric & the fabric is made out of yarn. Mainly Nylon 6.6 yarns are used in making fabrics for airbags with key denier (measurement of fineness) types being 420D, 630D, and 210D.

Polyester yarns are also used, though in a much smaller proportion, mainly in the side and curtain airbags with key denier types being 500D and 420D. Its high growth rate of double-digits is due to the increasing growth of side, knee and curtain airbags.

Of the two yarns used in making airbags, Polyamide yarn dominated the global automotive airbag yarn market due to its superior properties.

Polyamide yarns have good elasticity, fatigue resistance, energy absorption, high tensile strength and wear resistance, high tenacity, small friction coefficient, and relative density.

The key parameters where both the polymers differ are shown in the above table, Nylon 6.6 fairs better in the critical parameters of specific heat and energy required to melt the fabric, making it more desirable alternative.

A Magnified look into the Industry

Automotive textiles basically include all the fabrics used in the car, of it, airbags account for around 20% share and will be one of the fastest growing applications.

Stratview Research after an in-depth analysis of all the facets of the market, expects the global airbag yarn market in the automotive industry to grow at an impressive compound annual growth rate (CAGR) of above 7%, over the next five years to reach the market size exceeding US$ 1.3 million by 2024.

A handful of firms rule the roost in the global automotive airbag yarn market. Invista, PHP Fibers GmbH, Toray Industries Inc., Toyobo Co., Ltd., and Hyosung Corporation captured around nine-tenths of the total market in 2018.

The rapidly expanding economies of the Asia-Pacific help it grab the largest chunk of the global automotive airbag yarn market with a 40% share (value-wise) in 2018 which is also expected to post the highest growth in double-digits too. Its dominance can be accounted to the increased awareness, regulatory pressures and high over-all growth in the automotive industry. It is followed by North America and Europe.

While the USA, China, Germany, and Japan are likely to be the major markets, India, China, and Mexico are expected to grow the fastest.

The compact car segment accounted for a one-third share of the airbag yarn market, followed by SUVs (sports utility vehicle). The small car and SUV (apart from being the largest segments) are also the fastest growing ones too.

Curtain airbag dominated the airbag yarn market with half of the market share and is also expected to expand the highest with nearly double-digit growth rate; followed by passenger airbag, driver airbag, side airbag and knee airbag (in decreasing order of market share).

Drivers of Growth

The global vehicle production is growing at a nominal rate and is expected to boost the airbag yarn market. Maximum growth (value wise) is coming from the Asia-Pacific region, on account of the rapidly growing compact car segment.

Increased awareness is also an important factor in boosting growth. The increased awareness is on three fronts; consumers are more aware of their safety today, so is the government and the automakers who have strived to make their cars safe.

On the regulatory front, an aspiring China has implemented New Car Assessment Programmes (NCAPs) which is modeled on Euro NCAP and mandates the use of frontal airbags, resulting in the rise of the use of airbags.

In India, all new cars will come with compulsory driver’s airbag and ABS, as directed by the government with a deadline of 2019. Given the rate of accidents in India and China (shown in the graph), the regulatory changes were of utmost need.

Increased awareness has also resulted in the sales of side and curtain airbags. The emerging trends of external and central airbags shall also give impetus to growth. All the above factors together are pushing the sales of airbags and hence the market of airbag yarn.

M&A activities

High growth in the airbag market has encouraged the major airbag yarn manufacturers to add capacities over the past couple of years. Toray Industries Inc. has led the capacity expansion and has added more than 25,000 tons of polyamide/nylon 6.6 airbag yarn capacity by setting up plants in India and Mexico. Invista has also raised its capacity by more than 20,000 tons over the last five years.

The quest for expansion was also achieved in part by inorganic growth and the other reason to indulge in inorganic growth was to expedite product development. Indorama Ventures, the parent company of PHP Fibers GmbH completed the acquisition of German airbag fabrics maker UTT and the deal was completed in February 2019. The acquisition was done to leverage UTT’s highly specialized solutions in the field of technical textiles along with manufacturing sites in Germany and Mexico.

Indorama Ventures and Loop Industries announced a 50/50 joint venture to manufacture sustainable polyester resin in 2018.

The Road Ahead

The growth in airbag yarn market is strong with over 7% CAGR expected in the next five years. The growth seems even more impressive if we compare the cumulative sales of the next six years with the last six years, the sales are expected to grow by a whopping 48%. The only hurdle airbags face is their high cost, but with the push from the regulatory framework, the economies of scale can be expected to work in favour of consumers.

When regulatory framework changes, it unleashes waves of major changes in the industry. The present changes are of high magnitude and create a sea of opportunities. The need for cheaper and better airbag along with the need for higher capacity has already resulted in acquisitions and joint ventures. More changes wrt. product development, vertical integration, etc. can be expected in the future as the industry moves towards a new equilibrium in the future.

Source: Airbag Yarn Market Report