Global Lubricants Market Faces A Sea Of Disruptive Changes

By APA Bureau:

It has been proved over the years that change is the only constant in the automotive market. The trick to win is to remain adaptive. Lubricant is an integral part of the automotive segment, almost similar to the engineering industry. From the automotive perspective, in the short-to-medium term, the lubricant industry has two rivers to cross: one is remaining competitive with the improvements in the IC engine and the other is adapting itself to the challenges from electric mobility. The global vehicle fleet stood at 1.28 billion in 2015 and is projected to cross the two billion mark by 2035 and 2.5 billion by 2050. Moreover, more than 300 million electric cars will be on the road by 2040. These numbers are strong enough to challenge the lubricant players.
All applications with moving parts need lubricants which are made from different bases of mineral oil, synthetics or biological. A report by the Pune-based says, synthetic, and bio-based lubricants are expected to have high growth rates in the future.
The global automotive lubricants market is a highly organised one with top players accounting for majority of the market share. The major players in this segment are Royal Dutch Shell, ExxonMobil Corporation, BP, Chevron Corporation, Total, Sinopec Corporation, Fuchs Lubricants LUKOIL Oil Company, Valvoline, BPCL, Liqui Moly, Wolf Oil Corporation, Bluechem Group, PTT Lubricants, JX Nippon Oil & Energy Corporation, Repsol, Petrobras, Petronas, and IOCL.
The lubricant market is regulated by policies from environmental agencies such as the United States Environmental Protection Agency (USEPA), Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and European Chemicals Agency (ECHA). Lubricant products or chemicals that are imported or manufactured in Europe need to be preregistered with REACH and have to be compliant with ECHA regulations. Similar guidelines have been established by EPA to ensure biodegradability, toxicity, and labelling of lubricant products in the US.
The US-based Global Market Insights report in November 2018 suggest that lubricant market is estimated to surpass $75 billion by 2022. “Asia pacific lubricants market is anticipated to grow at the highest rate of over 11 percent. China and India lead the race. India is a major exporter for lubricants to other nations due to its high refining capacity. Europe led by Germany, Spain and Italy should consume over 9 million tonnes of lubricants by 2022. This increase in demand can be attributed to rising automotive industry and stringent environment protection acts,” the report said.
The report emphasised that increased importance of bio-based lubricants should propel business growth in future as companies have invested heavily on product development and R&D
The lubricant market is characterised by increasing demand for engine oils, transmission and hydraulic fluids in both the commercial and the consumer automotives. Increasing sales of passenger cars and motorcycles are expected to strengthen the trend.

Disruptive Changes

Globally, the lubricants market is growing and will continue to grow. The challenges with pricing and availability of raw materials bring disruptive changes in the market which is consolidating. The awareness about automobile emissions, even in the developing and under-developed countries, has its own role to play in the automotive market in general and in the lubricants market in particular.
The solution put forward by experts is to shift from IC engines to electric engines. However, the lubricants players say that this is not at all a solution as the making of batteries for electric vehicles and production of electricity are more hazardous. As a result, they don’t see a big change to electric mobility very soon. When it actually comes, they are ready to adapt and make specialty lubricants.
“Electric mobility will definitely come. But now there is enough scope for companies like us to serve the existing market. The current engine requires more improvement and in the next 15-20 years, the market will remain intact. Hence there is a huge opportunity,” says Ernst Prost, CEO, Liqui Moly. He confidently says that the company will make the required changes in time.
Players in the lubricants markets are drawing new strategies without fearing the changes in the industry. Some are tapping export markets in a big way and others are increasing product range and offerings to suit the market demand. Another interesting trend happening in the market is consolidation led by mergers and acquisitions. The US-based LKQ Corporation was only active in America in the past. Now, LKQ is acquiring major players in Europe like Stahlgruber GmbH. Companies like Wolf Oil say earlier they had to deal with 50 different players, but in the recent past the number has shrunk to a dozen.
An electric car may need only about 15 to 25 percent of the number of lubricants consumed by a conventional car. However, the requirement for the expensive specialty lubricants will be more than double, experts point out.
Frederic Decroix, Global Marketing Director of the Belgium-based Wolf Oil Corporation, also says that it will take time for electric mobility to become widespread. Hence the current IC Engines give room for companies like Wolf for a ‘long time.’
“Disruptive changes are happening in the automobile segment. There are various challenges also. One of the major challenges is the advent of electric mobility. But we seriously think that it will take time to become a major trend. This gives opportunities for companies to serve the existing engines/market,” Decroix said.
This Special Section of AutoParts Asia on ‘Lubricants’ profiles the initiatives of some of the major global lubricant players to remain afloat in a sea of disruptive changes.

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