In China, Reconsidering Customized Oils


In China, Reconsidering Customized Oils
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Marketing engines oils for specific makes and models of vehicles has not been a common practice in China. Rather than promoting products as recommended by the original equipment manufacturer or meeting an OEM specification, lube companies have claimed broader performance standards and employed other strategies to gain advantage.

The more specific approach received some endorsement, however, at an industry event held July 18 and 19 in Chengdu. Speakers at the Muchengyou Lubricant Marketing Forum talked up the idea of getting OEM approvals or of supplying oils recommended by the OEM. Referred to in China as Precision Lubrication, speakers said the approach might be one of the few ways for companies to survive China’s worsening economy.

Yulin Jindi, a lube company based in Yulin, Shaanxi province, is one example. As a joint venture between the state-owned heavy-vehicle manufacturer Shaanxi Automobile Group and the private conglomerate Yulin Orient, Jindi supplies motor oils and gear oils to many state-owned original equipment manufacturers, including SAG, Beiben Trucks Group and Hongyan Truck, a division of SAIC Motor. In 2015, Jindi launched its own brand – Jin Dian – for passenger vehicles.

Business went well until big companies, like CNPC, introduced long-life oils around 2018. Then the pandemic hit in 2020.

“Long-life oils affected lube sales in general, but the pandemic made things worse,” said Jin Di Sales Director Wang Gang. To mitigate the impact, the company has recently been exploring opportunities in PL for commercial vehicles.

“Unlike passenger vehicles, which have oil specifications from OEMs like Volkswagen’s 508/509, not many commercial vehicle OEMs [in China] offer oil specifications,” Wang said. “So ‘one oil fits all’ is still the model among commercial vehicles and that’s where we see the opportunities.”

Popular, a lube blender in Harbin, Heilongjiang province, PL has been promoted to its core business.

“We cannot change the market, but we can change our way of doing business,” Popular General Manager Yin Anguo said. “Precision lubrication is a business model that helps us stay more competitive in the crowded market under a challenging economy.” Popular’s 0W-20 synthetic engine oil, for example, is labeled as meeting API SP and ILSAC GF-6 industry specifications plus four OEM specs, including Ford WSS M2C 927A and Chrysler MS 6395.

The company’s clients are largely auto repair shops, which Yin described as being “flooded with lube brand options.”

“These shops don’t lack oil suppliers,” Yin said. “What they need is a supplier who can provide good tech support and help them grow profits.” To make Popular stand out, the company has been investing in PL market education to help bring shops new clients and hiring professionals for better tech support.

It has also consulted Muchengyou about a new packaging style to appeal to relatively young, affluent clients.

Muchengyou developed a modified vintage-style oil can to replace the common, modern looking package. It also developed a cartoon bear as the brand’s mascot and added a 1-liter variation to the normal 4-liter carton.

“Everything we do is to cater to the young car owners who want to be seen as different and interesting and who are constantly seeking something new,” Muchengyou General Manager Yu Feng said. The reason for adding a 1-liter option is that small packages are usually perceived as rare and high end.

“The image allows Popular to have some advantages in pricing,” he said.

But not everyone is positive about the PL business. Some speakers argued that introducing additional products makes inventory management more challenging.

“Customization means small-scale production,” said Ren Fei, founder at Rongdong Trading, an oil and auto parts wholesaler based in Erdos, Inner Mongolia. “It’s OK for a supplier to do it for just a couple of OEMs, but it could put too much stress on inventory if he wants to cover all major OEMs.” He added, “Customization is not something new, and I personally think it could lead to good business, but it is not for everyone.”

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