PP is on a fast track in automotive. (Outlook).

* Before September 11, leading automotive injection molders anticipated around 6.0% annual growth in their resin consumption for the next five years, leading to a market total of over 3 billion lb by 2006. That projection now seems optimistic in light of the current economic landscape. Since the 9/11 tragedy, many automotive suppliers have begun consolidating, downsizing, and laying off thousands of workers due to the shaky economy and declining new-car demand.

Fortunately, Detroit's revived incentives, low interest rates, and even zero-interest loans are generating renewed demand. Both October and November car sales were very strong. But the question still remains: Could the auto industry be cannibalizing future demand with current promotions? But it remains certain that automotive resin demand, especially for polypropylene and alloys, will continue to grow, as will displacement of higher cost materials.

PP in high gear

In our just-released study, Mastio & Co. pegs North American thermoplastic resin consumption at nearly 2.7 billion lb for 2001. Interior components make up 46% of the total resin consumed, followed by exterior components at 26%, under-the-hood components at 16%, and battery cases at 12%. The largest volume increase and greatest percentage growth was achieved in the under-hood sector, up a dramatic 81% and nearly 200 million lb, since our last report in 1997.

Polypropylene is the dominant resin for injection molded automotive components and represents 44% of the total resin consumed in this market last year. This is an increase of 6% or 270 million lb of PP since 1997. The majority of PP growth was under the hood, where PP usage was up 135% since 1997, for over 33% compounded annual growth.

This growth in PP resins and alloys has come at the expense of engineering resins such as polycarbonate, ABS, and nylon. Many PP alloys can be engineered to provide reliable properties with overall lower cost and improved recyclability. We predict that PP will continue to take market share from some engineering resins. This trend differs in the luxury car market, where more expensive polyurethanes are currently preferred for interior parts.

PP-based automotive resins include TPOs--both newer reactor grades and compounded types. They constitute about 30% of the 1.542 billion lb of PP-based materials used in automotive. Reactor-grade TPO, because of its lower price, is capturing market share from compounded TPO and other thermoplastics and thermoset polyurethanes. In bumper fascias, high-ethylene reactor TPOs predominate, while TPOs of all types have captured 85-90% of the business.

Interior trim is still dominated by PVC for soft trim, while PP has captured over 50% of hard-trim applications, including kick panels, knee bolsters, and pillar covers. Kick panels had been mainly ABS and ABS/PC.

Instrument-panel coverings, previously dominated by PVC, are now being converted to TPO skins. What's more, PP has captured nearly 85% of the European market for IP substrates but only a little over 10% in North America. In foam padding for instrument panels, polyurethane foams are being challenged by TPO skins and sheet-foam backings. While polyurethanes still have a significant share of the luxury-car market, TPO and PP threaten this dominance because of price and ease of use. Compatibility of the elements of an all-polyolefin construction makes assembly easier. To a lesser extent, improved recyclability of an all-polyolefin assembly also weighs in its favor in Detroit.

For the next five years, we predict that automotive uses of TPOs will grow at 5.7%/yr, while automotive consumption of neat PP will increase by 7.4%/yr. Total growth of PP-based automotive resins will be 6.9%/yr (see graph).

TOP 5 AUTOMOTIVE INJECTION MOLDERS

(By pounds processed)

1997                    Rank  2001

Delphi Group            1     Visteon Corp.
(General Motors Corp.)
Visteon Corp.           2     Lear Corp.
Decoma, Inc.            3     Textron Automotive Co.
(Magna International)
Lear Corp.              4     Venture Industries
Textron Automotive Co.  5     Decoma, Inc.
                              (Magna International)
POLYPROPYLENE AUTOMOTIVE CONSUMPTION


1997   915.2  1244.3
2001  1076.6  1542.0
2006  1474.5  2073.3

Note: Table made from line graph

Mastio & Company, based in St. Joseph, Mo., is a well-known consulting firm specializing in industrial-consumer opinion research and market trends in the plastics industry. Contact the author at [phone] or www.mastio.com.