By 2017, Kline projects full synthetics and semi-synthetic lubricants together will account for 15 percent of a global lubricant market estimated to reach 35.2 million metric tons by that year. According to Morvey, synthetic lubricants covered in the study included those formulated with API Group III, Group III+ (gas-to-liquids), Group IV and various Group V base stocks. He noted that while semi-synthetics contain a portion – usually 20 to 30 percent – of such base stocks, there is no generally accepted cut-off.

Klines study found Europe had the largest synthetics consumption by volume, at 28 percent of the regions total lubricants consumption in 2013. In North America, synthetic lubricants penetration reached 15 percent in 2013. In Asia-Pacific, 10 percent of total lubricant demand consisted of synthetics. South Americas synthetics penetration reached 7 percent, while Africa and Middle East together saw just 4 percent.

Consumer Automotive

Synthetics are projected to account for 33 percent of 10.9 million tons global demand in the consumer automotive lubricants market in 2023, up from 26 percent of 9.4 million tons demand in 2013.

Wholesale conversions from conventional to synthetic motor oil by carmakers such as Toyota, Honda and General Motors have increased the demand for synthetics.

These volume OEMs really move the needle in terms of synthetic penetration, and we expect that to continue as more and more of these types of OEMs convert either fully to synthetic or partially depending on their engine platforms, he noted. Certainly we are seeing longer oil drain intervals, and more vehicles equipped with oil life monitoring systems. In some cases, if you follow the system, the car might need an oil change once a year. With some German imports, that could be 14, 15, 16 months before getting an oil change. Those OEM factors are pushing the extended oil drain intervals and in turn creating demand for synthetics.

Morvey said that in all the country markets, to varying degrees, synthetic motor oil sales mainly go through the installed channels. Within the installed channels, more of the product is being consumed and pushed through the OEM franchise workshops, he said. In countries where they might have an older parc, people are using installed or independent workshops rather than franchises.

The mechanic or technician has a significant role in influencing the customers choice of lubricant. Vehicle owners look to those folks who are the expert to make the brand and product selection, and lot of them are doing that over an OEM approved brand list, he pointed out. A lot of the promotional activity we see in certain country markets is really directed to that decision maker as opposed to the vehicle owner.

Commercial Automotive

On the commercial automotive lubricants side, Kline projects synthetics to account for 7 percent percent of 13.9 million tons global demand in 2023, up from 6 percent of 11.9 million tons global commercial lubricants demand in 2013.

One key issue in the commercial space is the effort to try to convince owner-operators and fleet managers about the synthetic value proposition.

For preventive maintenance programs, scheduled and optimized, right now a Group II product meets those fleets needs to extend oil drains and maximize maintenance programs, Morvey pointed out. So its a challenge – almost door to door marketing – talking to decision makers, and trying to convince them to move to synthetics. We think the opportunity for synthetic engine oils is more in the light commercial vehicle category and consumer vehicles – passenger cars, pickups, and minivans used in commercial applications like rentals and taxis.

Industrial

On the industrial side, about 16 percent of the projected 13.9 million tons of industrial lubricants consumed in 2023 is expected to be synthetics, up from 12 percent of 12.2 million tons of industrial demand in 2013.

Kline found synthetic penetration varies by industry. Certain industries just have a higher appetite for synthetics for a whole host of reasons, Morvey said, including aviation, power generation, metal processing, transportation and the equipment industry. He pointed out that in aviation, synthetic is really the only option. In power generation, as more wind turbines are installed on or offshore, demand will rise for synthetic gear oil in gearboxes and for synthetic grease. Metal processing, transportation and equipment industries will also remain attractive markets for synthetics, he said.

Klines report is titled, Global Synthetic Lubricants 2013: Market Analysis and Opportunities.