A lubricant is a substance that is used to reduce friction and control wear between surfaces that are in contact with a relative motion. Automotive lubricants sold in the aftermarket are required for maintenance and smooth operation of vehicles after their purchase. Typically, a lubricant consists of approximately 80% to 90% base oil, and the rest is additives. However, these percentages vary according to application. Characteristics of a good lubricant include high boiling point, high viscosity index, corrosion retardation, thermal stability, low freezing point, and resistance to oxidation. Lubricants are used for their ability to increase the operating lifespan of mechanical parts. They can also eliminate any residue deposited over mechanical parts. Additives are added to the base oil to impart various properties to the lubricant and improve its performance. Lubricant additives are inorganic and organic compounds that are dissolved or suspended as solids in lubricants or base oils. in terms of type, the automotive lubricants aftermarket can be classified into engine oil, gear oil, transmission fluid, and others (including brake oil, greases, coolants, etc.). Aftermarket customers require lubricant suppliers to help them reduce their total operating cost. For instance, extended oil drain intervals help fleet owners to reduce their operating and maintenance cost, primarily by keeping cars and trucks on road for a longer duration of time. The type and quality of the lubricants used has a significant bearing on engine performance, fuel economy, and vehicle life. For instance, European cars and trucks have smaller, more fuel efficient and higher performance engines than vehicles in North America and Asia. Better fuel economy in cars can be achieved by reduced engine and gearbox friction, which is achieved by using lower viscosity and friction-modified lubricants.
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World Vehicle Usage
Increase in automotive vehicle fleet has been the main driver of the automotive lubricant aftermarket. The vehicles in operation all over the world require lubricants at frequent time intervals for smoother engine operation and fuel economy. The total global vehicle fleet, including passenger cars and commercial vehicles, stood at 1.28 billion in 2015 and is projected to cross the 2 billion mark by 2035 and 2.5 billion by 2050. Increasing vehicle fleet around the globe is a key indicator of increasing demand for aftermarket automotive lubricants in the near future.
Increasing Sales of New Vehicles
The total number of new vehicle sales stood at 96,804,390 units (including passenger cars and commercial vehicles) in 2017. The rapid increase in sales of vehicle in developing countries and development of infrastructure have created a strong demand for aftermarket automotive lubricants. Increase in manufacturing of vehicles is one of the major factors contributing to the expansion of the global automotive lubricants aftermarket. Rise in demand for low viscosity fluids in the automotive sector is expected to boost the automotive lubricants aftermarket during the forecast period. The engine oil segment dominated the market in 2017 and is expected to expand at a significant rate during the forecast period due to increasing number of vehicles. Engine oil has to be changed frequently after every 5,000 miles to 15,000 miles of vehicle usage depending upon the engine and base oil used. This is expected to boost demand for engine oil. A unique feature of the global automotive aftermarket lubricant industry is that there is no significant slowdown in the consumption of aftermarket lubricants during economic downturns or market slowdowns. For instance, when vehicle sales go up, there is more consumption of lubricants, whereas even if new vehicle sales go down, the running vehicle fleet requires lubricants at frequent time intervals for smoother operation. Oil changes in vehicles become more frequent as they grow old. Therefore, even during unfavorable market conditions, customers have to purchase lubricants in order to maintain the current fleet of vehicles.
Impact of Electric Vehicles on Lubricant Demand
In 2015, there were about 1.1 billion light passenger vehicles, of which 0.9% (9.9 million) vehicles were electric, while the rest were internal combustion engine (ICE) vehicles. Out of the total number of light electric vehicles (9.9 million), 0.1% were battery electric vehicles (BEV) and the rest were hybrid electric vehicles (HEV/PHEV). Despite the marginal penetration of electric vehicles, the move toward electrification of automotive vehicles is likely to gain further impetus as electric vehicles help reduce emissions to meet the CAFÉ norms and various emissions norms set across the world. Since battery electric vehicles do not have internal combustion engines, they do not require engine oil. They only consume small amounts of greases and other products. This is expected to hamper demand for light vehicle lubricants in the near future.
Synthetic and Semi-synthetic Oil Paving the Way for Future Automotive Lubricants
Currently, mineral engine oil dominates the global automotive lubricants aftermarket due to its reasonable price. However, the market share of semi-synthetic and synthetic engine oils is likely to increase in near future, due to increased product knowledge and higher awareness among consumers. As modern lightweight vehicle engines are put under enormous stress, automakers worldwide are shifting toward lubricant grades with less viscosity to support achieving higher mandated fuel economy standards and emission requirements. This has led to increasing consumption of synthetic and semi-synthetic lubricants in newer cars, and it presents a significant market opportunity for all the aftermarket service providers. Synthetic engine oils are made with a variety of performance additives and synthetic base oils. Unlike mineral base oils, synthetic base oils are engineered with molecules of uniform shape and size and are optimized to consistently perform better than mineral base oils. Synthetic oils offer many advantages for newer and advanced engines. They don’t break down as easily as mineral oils, which means they protect the engine longer from excessive metal-to-metal contact that causes wear. Synthetic engine oils also function better in extreme hot and cold temperature conditions. They are paving the way for next-generation engine technology. The inclination toward use of lower viscosity oils to achieve newer grades such as 0W-20, 0W-30, and still to come 0W-16 requires the use of synthetics. Automakers are demanding even lower viscosity grade lubricants, for example 0W-8, which is possible only with synthetic formulations.
Japanese cars have used 0W-20 grade lubricants for several years, and their U.S. and European counterparts are now following in their footsteps. When the new ILSAC GF-6 specification becomes active in near future, synthetics are expected to play a more prominent role.
Market Bound by Emerging Economies in the Aftermath of Global Recession
Consumers in developed and developing regions have different mobility needs. Continued urbanization is likely to lead them toward car ownership. The global lubricants industry has seen a dramatic rebound since the global economic recession of 2008–2009. One of the key drivers of this rebound is higher demand for lubricants from developing economies. This can be ascribed to the surge in new vehicle sales and rise in number of onroad vehicles in Asia Pacific, Latin America, and Middle East & Africa. Economies of rapidly expanding countries of the market such as China, India, and Brazil are expected to achieve significant growth rates in the near future. This is anticipated to drive the global automotive lubricants aftermarket.
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Consolidated market with the top few players accounting for more than 60% of the market share
The global automotive lubricants aftermarket is a highly organized market with top players accounting for majority of market share. Key players operating in the Automotive Lubricants Aftermarket are Royal Dutch Shell plc, ExxonMobil Corporation, BP p.l.c., Chevron Corporation, Total S.A., Sinopec Corporation, Fuchs Lubricants Co., LUKOIL Oil Company, Valvoline, Phillips 66, Bharat Petroleum Corporation Limited, JX Nippon Oil & Energy Corporation, Repsol S.A., Petrobras, Petronas, and Indian Oil Corporation Limited.
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