In 2009, were estimating the U.S. consumer automotive market at 586 million gallons, with just over $5 billion in revenue, Morvey stated. That compared to 783.9 million gallons and $5.1 billion revenue in 2006, and 838.4 million gallons with $3.4 billion revenue in 2003.

The decline in consumption between 2006 and 2009 was due to multiple market and economic factors, he pointed out, including declining new vehicle sales, escalating fuel prices, fewer vehicle miles traveled, extended drain intervals, penetration of synthetics, and more recently the global economic recession. Another factor was the shift towards filled-for-life components, such as automatic transmissions, gearboxes and transaxles. The shift from do-it-yourself to do-it-for-me oil changes also played a role.

The overall market value had been rising since 2003. One factor was introduction of the American Petroleum Institutes SM service category in 2004. That had an impact on the price of engine oil, and in the next couple of months well see introduction of API SN, Morvey asserted. All indications are the price point over current price points will be higher. That will have an impact across the entire supply chain.

According to Klines estimates for 2009, Shell was the leading U.S. supplier of consumer automotive lubricants at 24 percent of total consumption. It was followed by Valvoline and BP at 13 percent each, ExxonMobil at 9 percent, ConocoPhillips with 7 percent, Chevron at 6 percent and Citgo with 1 percent. The remaining 27 percent included companies such as Pinnacle, Warren oil, Amalie and American Refining Group, along with many other national and regional companies.

PCMO Viscosities
Kline estimated that 5W-30 was the leading passenger car motor oil vis grade in 2009, capturing 51 percent of total U.S. demand. However, we do see 5W-20 demand rising significantly from where it was in 2006, to just just under 20 percent of the total volume, Morvey observed. This is really due to the Ford factory and service fill, the Honda factory and service fill, and to some extent Toyota. We do see demand for the 10W-30 and 10W-40 shifting and favoring the 5Ws.

Kline is excited about opportunities for 0W oils, he asserted. We do see them poised for growth beginning in 2010, as Toyota and Honda shift their factory and service fill requirements away from 5Ws to 0Ws to meet stricter fuel economy regulations, Morvey continued. That will certainly be something to watch, and certainly offer opportunities for suppliers and installers.

Total Volumes
Kline estimated overall North American (including U.S., Canada and Mexico) finished lubricant demand reached 2.6 billion gallons in 2009, down 12 percent from nearly 3 billion gallons in 2008. Commercial lubricants demand declined 14 percent to 624.5 million gallons, while consumer demand fell 13 percent to 702.5 million gallons in 2009, compared to 2008 totals. Thats a function of many factors, including extended drain intervals, vehicle miles traveled, and the penetration of synthetics, Morvey said. Kline includes process oils and marine oils under industrial, which accounted for about half the total volume.

The recession has had the biggest overall impact. If we look at the rate of recovery in the forecast from 2009 out to 2014, we do see the North American market emerging from recession, and beginning to recover, Morvey observed. However, by 2014, we still see the total industry demand to be less than the pre-recession levels from 2007. Kline estimated the 2007 total finished lubricants demand at almost 3.2 billion gallons. So really this growth here across all three segments is just a recovery from the big decline due to impact of the recession, he added.

Klines forecast sees the North American finished lubricants demand recovering to almost 2.9 billion gallons by 2014 and then essentially flat going forward from that point. We really dont see the market recovering to levels from 2007 or earlier years, Morvey remarked.

With more than 2.2 billion gallons, the U.S. accounted for about 85 percent of the total North American demand in 2009. That includes 51 percent industrial (1.13 billion gallons), 26 percent consumer automotive (575.9 million gallons) and 23 percent commercial automotive (509.5 million gallons).

Kline expects U.S. finished lubricant demand to reach almost 2.5 billion gallons by 2014, recovering some of the volume lost due to the recession. From 2009 to 2014, Kline forecasts demand increases of 1.5 percent per year for industrial finished lubricants, 2.4 percent per year for consumer automotive and 3 percent per year for commercial automotive.

Canada accounted for about 8 percent of the total North American demand in 2009, reaching about 207.4 million gallons. That represented a nearly 9 percent decline from 2008, due largely to the impact of the recession. We do see again a rebound, but really thats just lost volume recovery. Again like the U.S., it is not seen recovering to pre-recessionary levels from 2007.

Mexico accounted for almost 7 percent of the total North American lubricants demand in 2009, with 180 million gallons. The forecast suggests the Mexican market demand will recover some of its volumes to 2014, to 209.3 million gallons.

Branded Suppliers
Major branded suppliers combined accounted for 44 percent of the total North American demand in 2009. Shell, ExxonMobil and Chevron were the top three suppliers in the United States.

The overall major branded volume was down 15 percent compared to 2008. We did see branded volume suffer on two fronts – certainly the impact of the recession, but also heightened competition from private label brands, Morvey noted. People have in some cases shifted from the major brands to perhaps a brand in one of the mass merchandisers or auto parts store that support their own branded volume.

Within the U.S. market, ExxonMobil is the industrial leader among major branded suppliers, trailed by Chevron and ConocoPhillips. Meanwhile, Shell led in consumer and commercial automotive finished lubricant sales in 2009, with Valvoline and BP behind it.

Klines report is titled, Opportunities in Lubricants 2008-2010: North American Market Analysis, Vol. II: Consumer Automotive 2009.