Partnerships with online-to-offline auto care service providers are proving a popular way for domestic and international lubricant companies to score sales in China.
Many lubricant companies are partnering with auto maintenance service providers to tap into Chinas growing aftercare market. Chevron China offers a recent example, having inked a deal with China Continent Insurance through the Shanghai-based companys online-to-offline (O2O) auto care service platform, YX-Cat, which has 25 physical stores in China.
According to a statement, Chevron will provide its Havoline-branded synthetic oils to car owners who shop for Continents Yi Yang Hu, or Easy Care, brand of services through YX-Cat, as well as to Continents auto insurance clients. YX-Cat stores offer services ranging from engine oil replacement to repairs.
Guo Baomin, adviser to the president at Chevron China, said the fast-growing O2O aftermarket in China provides huge potential for its lube business there. Online-to-offline refers to the practice of using the internet to connect with potential customers and draw them to actual stores.
As more Chinese bought cars, demand for auto care services grew by at least 20 percent each year from 2010 to 2015. Last year, Chinese drivers spent 856.8 billion (U.S. $128.2 billion) on car care, according to Beijing-based YASN International Exhibition Co., which hosts events for the aftermarket services industry.
Other lube companies entering the arena include Valvoline, which in July teamed up with Tuhu, an O2O auto care service provider in Shanghai - and Shell, which supplies two 0W40 and 5W40 synthetic lubes exclusively to a Shanghai-based O2O auto care service provider, i-maintenance.
Compared to big multinationals, smaller Chinese private lube companies may be more agile when it comes to jumping into the O2O market. One example is Nanjing-based Lopal Tech, which is known for its fast growth under the leadership of internet savvy CEO Shi Junfeng.
In May, Ali Car, the online vehicle sales arm of the e-commerce giant Alibaba, signed an agreement to promote Lopals lubes. Ali Car is aggressively promoting its auto care chain store brand, Ali Che Ma Tou, in the nation by actively seeking qualified partners in various aftermarket services. Lopal is its exclusive lubricants supplier so far.
The partnership helps us on branding and sales, Chen Xiaoxing, marketing director at Lopal, told Lube Report Asia. In Nanjing alone, Lopal lubes are in 50 Che Ma Tou stores. Che Ma Tou stores in Hangzhou, Guangzhou and Zhenzhou also serve Lopal lubes.
Chen said Che Ma Tou focuses on major second-tier cities, and is currently expanding. Our products just go where Che Ma Tou goes. I think its a new O2O model that holds big opportunities for us, he added.