Indonesia May See Shift to Synthetic PCMOs

As Indonesias automobile parc continues its forecasted path to over a million units this year, observers say that preference will trend toward synthetic passenger car motor oils.

As the nations economy recovers and domestic consumption gains traction, its vehicle sales are expected to grow by 5 percent to 1.1 million units this year, according to a recent report from American business research firm Frost & Sullivan.

Sales of commercial and heavy-duty vehicles declined significantly in 2016, but passenger cars grew by 16 percent, to 854,000 units. Passenger cars in Indonesia are projected to grow at a double-digit rate for the next 5 years, said Gervasius Samosir, a consultant at Solidance. He told Lube Report Asia that in the past two years, motorists have been buying more low-cost green cars, a category that increased the most of any type of vehicle last year, or by 38.3 percent, according to the report. Middle- to upper-income drivers are switching to SUVs, which increased by 23.7 percent.

Japanese automakers dominated all segments. For passenger cars, Toyota led with a 43 percent share, followed by Honda with 23.3 percent and Daihatsu with 17.3 percent. A spokesman for a Singaporean subsidiary of German additives supplier, Evonik, said thats at least one reason the quality of automotive lubricants is rising. We are seeing increasing trends whereby stringent fuel economy requirements have also percolated down to these countries as original equipment manufacturers, both Japanese and Korean, demand ever lower-viscosity lubricants to fulfill these needs.

Gervasius concurred, noting that theres a clear switch in preference from mineral oils to synthetic oils. We are seeing stable growth for the automotive lubricants market in Indonesia, he said. From a survey taken in the top 10 cities in Indonesia, most consumers prefer to have synthetic lube oil due to its higher lube change [intervals ranging] from 5,000 kilometers to about 10,000 km.

The engine oil market is still led by state-owned Pertamina Lubricants, he added. International brands follow in the next three spots: Castrol, Shell and Mobil. Despite consumers strong attraction to specific brands, counterfeit products still leak into the market, he said.

Confidence in the automotive market has likely been boosted by [the] governments tight control on the fiscal situation, various stimulus packages for the economy and the much-lauded tax amnesty scheme, said Vivek Vaidya, senior vice president of mobility at Frost & Sullivan.

Federal spending on infrastructure was expected to be a boon to the commercial vehicle market, as was the upswing in prices for commodities such as coal and palm oil toward the end of the year, but global demand was weak, Vaidya said. [This caused] businesses to hold down their fleet renewal, impacting all commercial vehicle segments. Commercial vehicle sales sank 25.5 percent to 206,000 units in 2016. Sluggish growth in the key mining sector caused further declines in heavy truck sales, he added.

The slump in the pickups and small commercial vehicles segment shuffled OEMs market shares, causing Suzuki and Daihatsu to drop their takes to around 20 percent each, behind Mitsubishi, which retained around 36 percent of the market. Hino and Isuzu increased their shares to 10.5 percent and 7.2 percent, respectively.