Growth Still Forecast for China Car Parc

After declining for the first time in two decades last year, Chinese vehicle sales are down more sharply this year, hampering the domestic lubricant market.

But the nation remains by far the worlds biggest automobile market, and its car and truck segments both still have potential for great growth, which in turn offers long-term opportunity to lubricant marketers, an official from a chemical additive company said at a conference here this week.

In addition to the prospects for volume growth, the quality of automotive lubes used in China is also rising.

New vehicle sales dropped 2.8 percent in 2018 to 28 million and were off more than 10 percent for the first quarter of 2019, Infineums Leon Zou told RPIs Global Lubricants conference, held here last week. Analysts blame the decrease on Chinas trade war with the United States, declining consumer confidence and stricter Chinese emissions regulations.

That decrease has hurt the countrys lubricant market, but Zou advised his audience to focus more on longer-term prospects.

The market has potential for growth as 28 million new vehicles were registered last year, raising the total vehicle fleet to 240 million units, a 10.5 percent increase compared to 2017, said Zou, who is Infineums customer technical support team leader in China.

China has 118 passenger cars per 1,000 people, still below the global average of 176 and way below the per capita car populations of North America and Europe.The quality of lubricants required for those cars is relatively high because the average vehicle age is just five years. Performance requirements will continue to rise with the upcoming implementation of China 6, a two-phase regulation that will eventually be stricter than European standards.

The regulation aims at fuel consumption reduction in the cars that use internal combustion engines to 5 liters per 100 kilometers by 2020 and 3.2 liters per 100 km by 2030, Zou said. With it, the next generation oil specification is coming soon for heavy-duty diesel and passenger car motor oils that will require fuel economy and low-speed pre-ignition engine tests.

The second phase of China 6 is not scheduled to take effect until 2023, but Zou said OEMs will launch models that meet the standard before then. He added that those vehicles will be equipped with gasoline particulate filters, meaning they will need engine oils that have low levels of sulfated ash, phosphorus and sulfur so as not to compromise the filters. The ability to avoid LSPI also requires advanced formulation. All in all, Infineum concludes, new cars will require engine oils that meet higher performance European standards.

The new oils have lower viscosity levels to achieve the new fuel economy requirement, Zou said. And the market will generally trends toward more interest for plug-in hybrids.

Zou said Volkswagen is the top car supplier in China, having sold 4.2 million vehicles on the Chinese Mainland and in Hong Kong in 2018. It was followed by General Motors, which had sales of 2 million. Geely, SGM Wuling, Great Wall and Chang An are the top domestic manufacturers, with sales of 1.65 million, 1.6 million, 911,000 and 822,000 vehicles, respectively.

Local OEMs are picking up their sales while the foreign car makers such as Korean Honda Motor Co. and French PSA are losing market share, Zou said, adding that the Chinas commercial vehicles production topped 4.2 million in 2017, reaching the 2010 level.

Contrary to the passenger cars, the Chinese truck segment is dominated by local manufacturers.

This segment is more consolidated than the passenger vehicles, while its subcategory, the heavy-duty diesel truck production is the largest in the world. In 2018 it held 43 percent of total truck production globally, Zou said.

Chinas stage VIa emission standard for heavy-duty diesel engines, similar to Euro VI, was implemented last year with engine oil requirements such as durability for longer oil drain interval, high anti-oxidation and nitration characteristics and low viscosity for improved fuel economy.

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