China Lube Quality, Demand to Soar

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SINGAPORE – Demand for higher quality lubricants is rising fast in China, the worlds largest lubricants market. At the same time, nearly every car owner there is a first-time car buyer with no experience of maintenance, so workshops are scrambling to instill loyalty and keep cars returning for oil changes.

In China, end user attitudes are being defined today, Mike McCabe, Lubrizols Asia Pacific marketing manager, told the ICIS Asian Base Oils & Lubricants Conference here last week. In a study of 200,000 consumer discussions in online Chinese forums late last year, Lubrizol found nearly 40 percent asking which oil should I use? Debates about synthetic vs. conventional oils accounted for another 17.5 percent of the discussion.

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McCabes overview of Chinas dynamic automotive lubricant market predicted significant changes in demand by oil performance level, by viscosity grade and by base oil usage.

For passenger car engine oils, Lubrizol sees API SJ/SG oils dropping from 75 percent of the market in 2010 to about 30 percent by 2020. Todays highest performance oils (API SN, ILSAC GF-5, ACEA Ax/Bx plus automaker specs, and above) will zoom from less than 10 percent market share in 2010 to 35 percent by 2020. A similar pattern holds for heavy duty diesel engine oils, where API CH-4 and above will rise from 20 percent of the market in 2010 to nearly 50 percent by 2020.

Looking at viscosity grade, McCabe said 10W-xx and lighter oils in 2010 made up about 17 percent of the passenger car market and will account for about two-thirds by 2020; 5Ws and lighter will make up half of that 2020 total. On the HD side, 15Ws and lighter grades will account for nearly two-thirds of the market by 2020.

These changes in engine oil quality will only be possible with major changes in base oil use. For passenger cars, Chinas API Group I demand will plummet from nearly 90 percent market share in 2010 to about 25 percent share in 2020. Group II and Group III will each account for around 35 percent of the market by 2020.

For HD engine oils, Group I base oils made up more than 95 percent of the market in 2010 and will account for a bit over 60 percent by 2020, while Group II will gain some 35 percent market share.

Chinas lubricant market is huge and growing, McCabe said. Worldwide, the automotive lubricant market was about 21 million metric tons in 2012; Chinas share was about 4 million tons. By 2020, The worlds automotive lubricant demand is expected to rise to 26 million tons; Chinas share should top 6.5 million tons, a quarter of the global total.

Vehicle sales are driving the geographic shift to Asia, McCabe continued. In 2012, 86 million vehicles were sold in Asia, 43 million in China alone. And most countries in Asia base their automotive emissions legislation on Euro standards. Japan and Korea follow different legislation, but are already advanced emissions-control markets.

For passenger vehicles, China, like Australia, Thailand and 20 cities in India, is an advanced emissions-control market today. This year, China will move to advanced emissions control for heavy duty vehicle emissions.

As the number of cars in Asia increases, the majority will have been designed to meet advanced emissions controls, said McCabe. And this requires the most advanced lubricants.

In China, the countrys most recent five-year plan includes a number of provisions that will have a significant impact on lubricants. These include stimulating inland growth and urbanization – leading to increased manufacturing, increased spending power and increased vehicle ownership. The number of passenger cars in China is forecast to more than double by 2020, to over 220 million vehicles, McCabe said.

Chinas five-year plan also calls for reducing pollution and CO2 emissions. As is the case elsewhere in the world, stringent legislation is limiting vehicle emissions, demanding fuel efficiency and better fuel quality. The result is increased demand for high quality, fuel efficient engine oils.

Looking at Chinas vehicle owners, McCabe emphasized that Chinese attitudes and behaviors regarding vehicle maintenance, oil changes and oil selection are being formed today. International brands and imported products are still viewed as higher quality than domestic brands and manufacturing, he said.

In China, people communicate online about car maintenance, said McCabe. People dont understand specs or handbooks. In its study of online consumer forums about engine oils, Lubrizol found 2.5 percent of the discussion involved sharing experience; 8 percent on where to go for an oil change; 9 percent on price comparisons between different oils; 11 percent about oils for different engine types and fuels; 12.6 percent on performance attributes; 17.5 percent on synthetic vs. standard oils; and a whopping 40 percent asking which oil to use.

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Asia    China    Finished Lubricants    Region