Chinas Fuel Regs Steer PCMO Changes


STUTTGART, Germany-With 240 million vehicles on its roads and sales that are booming despite slowing economic growth, China may be the worlds most crucial automotive lubes market, Infineum says. Suppliers challenge, though, is to navigate and cater to the countrys rapidly changing fuel economy and emissions regulations.

Infineum International Inc. made these points as part of its Infineum Trends 2015: Making a Difference in a Complex World” report, which was presented in part to the Uniti Mineral Oil Technology Congress here on April 13.

Although Chinas growth rate for new car sales cooled along with the countrys economy, vehicle sales still increased 10 percent year-over-year to top 23 million units in 2014. By comparison, the United States sales were an estimated 16.5 million.

Of Chinas new vehicle sales, 84 percent were passenger cars, with sales for sport utility vehicles and multi-purpose vehicles, such as mini-vans, up by 36 percent and 47 percent, respectively. Sales of commercial vehicles dipped in 2014, a trend that Infineum found is primarily due to the recent implementation of national China 4 emissions standards.

As the massive car fleet continues to grow, pollution is a pressing concern, said Infineum. In a country with so many vehicles on the road, the biggest drivers for [lubricant] technology change are the tightening emissions and fuel economy limits that are being implemented.

China 4 emissions regulations, which are equivalent to Euro 4, are being introduced nationwide for diesel vehicles this year, and China 5 will be adopted in 2018 as the nationwide standard for both diesel and gasoline engines.

In the next ten years, Infineum pointed out, China has plans to progressively tighten fuel economy regulations. “The current system will drive upgrades to powertrain technology – although some original equipment manufacturers will find it very tough to meet China 5 limits. All OEMs must introduce advanced technologies to meet these tough new limits, and the move to higher quality oils will accelerate.”

Infineum went on to stress that the lubricants approval processes held by the myriad automakers in the Chinese market are varied and highly fragmented. Global joint ventures mainly follow the proprietary specifications held by their owners, such as Volkswagen, Daimler and GM, while domestic OEMs mainly apply consensus standards such as API and ACEA.

Most local OEMs are working on turbocharged gasoline direct injection engines, for example, as a way to achieve fuel economy and emissions targets. Infineum believes that this trend is likely to speed up the move from the API SL/GF-3SAE5W-30 oils typically in use today to lower viscosity oils meeting API SM/GF-4, API SN/GF-5 and future ACEA specifications.

The nations heavy-duty diesel market is also undergoing stark changes in fuel economy and emissions regulations. As OEMs step up the development of engine and after-treatment technologies, new oil specifications to increase lubricant quality are likely to emerge, according to Infineum. We expect to see quality upgrades [to oils that exceed limits for] API CF-4 and a move to viscosity grades lower than SAE 15W-40, which is currently the main grade in the market.

Infineums executive vice president of marketing and technology, Chris Locke, explained how important China is to the companys growth strategy. Infineum is now making significant new investments to meet the needs of our customers in the region. We opened a new business and technology center in Shanghai in July 2014, and were currently finalizing the construction of the first phase of a new manufacturing facility in Zhangjiagang.

Although Chinas large coastal cities are already heavily targeted by outside players, Locke noted that the nations overall market is balancing out because of the governments increased focus on its inland regions. If we look at the policies of the Chinese government, theyre very much moving investment and growth focus westward into markets that are less saturated than those on the coast, he concluded. Therefore, I see little change in the fundamentals of this industry, with China continuing to be a major growth engine of the business.

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