High-Quality Lubes to Create Lucrative Opportunities for Market Growth
Automotive lubricants dominate the global lube consumption, which in 2018 reported sales of over 40 million tons. Automotive lubricants accounts ~ 55% of the global lubricants market and the demand for high-quality lube is expected to create significant opportunities over the long-term forecast period.
Royal Dutch Shell PLC, ExxonMobil, BP plc, Chevron Corporation, FUCHS, are some of the prominent players in the automotive lubricants market holding a significant share of the global market. In recent years, leading players have shown strategic moves such as acquisitions, mergers, and expansion projects to enhance their market position in the global automotive lubricants market.
For instance, in last few years, lubricants manufacturer FUCHS Petrolub SE, has spent nearly 12 million dollars at their site headquartered in Stoke-on-Trent, United Kingdom. The investment was made for new automated and energy-efficient machinery at FUCHS’ Hanley base.
Furthermore, in April 2019, ExxonMobil, a multibillion-dollar crude oil refining company announced that it will manufacture high-quality lube base stocks, high-performance lubricants, and cleaner fuels in Singapore. This project will add 7 million barrels per annum of Group II base stocks capacity, which is mostly used to manufacture high-performance automotive lubricants.
As per Fact.MR analysis, this investment is expected to increase the ExxonMobil’s outreach in Europe as well as in the Asia Pacific region.
The above mentioned, inline expansions and investments have shown that companies could offer a reliable supply to tap the increasing demands for automotive lubricants.
Technological Advancements to Improve Efficiency and Productivity
In terms of consumption, over 60 percent of the energy is consumed in the vehicle through the engine components. So improvements in automotive lubricants is the ideal place to optimize the performance of engines.
High-performance automotive lubricants constitute excellent solvency and better hydrophilic properties.
Application of these automotive lubricants leads to durable operation of the engine through lighter viscosity grades of high-performance lubricants. Additionally, less viscous and premium synthetics lubricants also increase the fuel economy of engines to a greater extent.
In recent years, nano-lubricants have been an advanced development in the market of automotive lubricants, created by adding nanoparticles to lube oils. Adding carbon-based nanoparticles in automotive lubricants improve the anti-wear properties and help to reduce the frictional resistance in the engine.
Nano-lubricants not only reduce the frictional resistance but also enhance the load-carrying capacity of the engine. But the tendency to “settle out” from the liquid lubricant, nano lubricants need extensive research for their stable and effective production.
Furthermore, performance additives are added to automotive lubricants to enhance their performance and ensure a prolonged engine life. In modern automotive lubricants, combination of additives are used to serve better lubrication in engine.
New modified engines, a higher range of operating conditions, new government legislations ensure the requirement for additives to enhance the efficiency of automotive lubricants.
The concentration of performance additives in automotive lubricants ranges from ~ 0.005 to more than 10%.
Additives added to automotive lubricants not only improve the fuel efficiency of the engine but also reduce CO2 emissions from vehicles by minimizing frictional resistance. To maintain the efficiency and to reduce the emissions, some new automotive lubricants have low contents of sulfated ash, phosphorus, and sulfur.
To meet the ever-changing consumer demand for high-performance automotive lubricants and strict environmental legislation to reduce CO2 emissions, market players need to implement advanced technologies.
Prominent manufacturers can leverage R&D activities to bring more efficiency and new advancements, which will add more value to the existing product portfolio in the forecast period.
Strict Environmental Regulations Impacting Adoption of Automotive Lubricants
To control carbon emission and air pollution caused due to automobiles, various governing bodies and international organizations have developed some standards and guidelines.
All automotive lubricant manufacturers in the world have to comply with the strict regulations enacted by environmental organizations in different geographical regions.
For instance, governments of countries such as the Netherlands and Norway have decided that from 2025, no new cars will be approved with internal combustion engines. Furthermore, as per Paris Climate Agreement, CO2 emissions shall not exceed CO2 absorption levels.
As a consequence, Europe’s government is set to introduce ~ 40 hybrid cars, followed by e-cars and internal combustion engines. To adhere to environmental regulations, manufacturers have to make some significant changes in their manufacturing processes, which may lead to the increased production cost of automotive lubricants.
Increased Focus on Bio-based Automotive Lubricants
Significant growth has been seen in the market of bio-based lubes due to the harmful effects of automotive lubricants on the environment and pollution caused by diesel vehicles.
Furthermore, to meet government norms and regulations, many countries are likely to reduce the usage of gasoline and diesel cars in the future. Nevertheless, leading manufacturers are focusing on the production of eco-friendly automotive lubricants, which are less toxic, and have zero effect on human health and the environment.
Companies such as FUCHS Petrolub SE, Castrol Limited, etc. offer a wide range of bio-based automotive lubricants developed to reduce environmental impact and better lubrication performance. Furthermore, Biosynthetic Technologies, LLC has lifted ~ $9 million to commercialize its range of bio-based products.
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Adoption of Electric Vehicles to Hamper the Demand for Automotive Lubricants
Number of countries are tilting towards e-mobility solutions. For instance, the Netherlands and Norway declared that from the 1st quarter of 2025, no new car with combustion engines will be approved. Similarly, Volkswagen is completely realigning with its TRANSFORM 2025+ strategy.
As per the company’s policy, its target is to sell about one million electric cars per year by the end of 2025 and to dominate the e-mobility market. Electric vehicles are gaining importance and witnessing a smooth growth in the past ten years. In China, about 2 million electric cars were on the road in 2018. Additionally, Europe and the United States are also looking for further investments in electric vehicles such as increasing number of charging stations.
Increase in the number of electric vehicles will decline the usage of combustion engines, which will impact the automotive lubricants market. At the same time, gasoline and diesel-based automotive industries are well established markets. So even with new electric vehicles, the automotive lubricants market has a lot of potential and is a big market in terms of revenue.
Industrial Expansions to Meet Market Demands
Royal Dutch Shell PLC, holds a significant share in the automotive lubricants market. The company sold 4,400 kilotonnes of finished lubricants in 2017. Furthermore, to align with the market demand, on 15th April 2019, Saudi Aramco (Saudi Arabian Oil Company) announced that it will acquire ~ 17% stake of Hyundai Oilbank, located at South Korea. The plant has the manufacturing capacity of 237 million barrels of refined crude oils and base oils.
In the 1st quarter of 2019, ExxonMobil finished its new project at Rotterdam refinery, thus, became the world’s largest base stock producer of group 1 and group 2 base oils.
Furthermore, ExxonMobil is investing in Singapore, which will further increase the output of Group II base stocks and cleaner fuels providing ExxonMobil, a significant advantage in the competitive automotive lubricants market. Furthermore, in 2018, ExxonMobil acquired PT Federal Karyatama (FKT) blending plant located in Cilegon, which is one of Indonesia’s largest manufacturers of motorcycle lubricants.
This acquisition will add up a capacity of 700,000-barrel-per-year in ExxonMobil’s existing capacity. Looking at recent strategic approaches like acquisitions, mergers, and production capacity expansions of prominent manufacturers, the automotive lubricants market is set to witness healthy growth in the forecast period.
An Adaptive Approach to Modern-day Research Needs
With new regulations and specifications coming into practice, upcoming years are likely to witness the crucial years for automotive lubricants industries. To be in line with the market, players will have to continuously adapt evolving finished lubricants requirements, by reducing supply chain complexity, enabling cost-effective blending through superior base stock design & performance, and by ensuring availability of affordable, reliable supply.
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Automotive Lubricants Market: Segmentation
Fact.MR has segmented the automotive lubricants market on the basis of lubricants, base oil, vehicle and region
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