Automaker recommendation will be a primary driver of demand for synthetic engine oils in the light vehicle segment, Freedonia analyst Minor Cline told a reporter. A growing number of automakers, including domestics such as Ford, as well as foreign [ones] such as Honda, are recommending synthetic or semi-synthetic motor oils, Cline pointed out. Furthermore, manufacturer recommendations for 0W-20 grade oils, which must contain synthetic base stocks to meet viscosity requirements, will be increasingly common. Despite the premium price commanded by synthetics and semi-synthetics, vehicle owners will by and large adhere to the [OEM] recommendations.

New engine technologies are also placing stricter demands on engine oil, which is leading automakers to recommend premium synthetic products. Turbocharged engines in particular subject engine oils to much higher temperatures and often require synthetic or semi-synthetic engine oils, the analyst said.

Despite synthetic products advantages, conventional engine oils will continue to dominate the market through 2025. Synthetics can cost more than twice as much as conventional products, and the benefits conferred by synthetics may be unclear to consumers or not worth the expense, Cline stated.

The analyst noted that synthetics will remain a small portion of products demanded for some industrial applications, such as hydraulic fluids. However, opportunities for synthetics are gradually expanding, as more plant operators recognize the potential for savings in the long run due to reduced maintenance, Cline said. Additionally, the improved power and efficiency of new equipment tends to create a harsher operating environment, which high quality synthetic lubricants are better suited for.

Synthetics have historically held a very modest share of heavy-duty oils. The primary development expected in the heavy-duty engine oil market is the progression towards lighter viscosity grades of conventional oil, mainly 10W-30, the analyst stated. However, the potential to reduce maintenance costs and improve fuel efficiency will motivate a small but growing number of fleet operators to switch to synthetics.

One area Freedonia will watch closely is the adoption of electric vehicles into the U.S. motor vehicle fleet. Although the current federal administration may not push regulatory incentives to produce electric vehicles as aggressively as its predecessor, Cline said, regulations in California are expected to continue promoting demand for such vehicles. Improved battery technology and growing consumer preference for zero-emission vehicles will also contribute to electric vehicle adoption, Cline said. If these vehicles capture a large share of the market, this could have a significant impact on the need for engine oils.

Freedonia estimated the total demand value for synthetic lubricants and functional fluids – which includes products such as engine coolant, heat transfer fluid and electrical oil – in the United States at $4.3 billion in 2015. Engine oils accounted for 35 percent of that amount, or $1.5 billion. Transmission and hydraulic fluids accounted for 15 percent, or $645 million, while metalworking fluids made up 12 percent, or $516 million.

Among functional fluids, engine coolant accounted for 16 percent, or $688 million. Heat transfer fluid amounted to 12 percent or $516 million. Electrical oil accounted for 3 percent or $129 million. Other types made up the remaining 11 percent, or $473 million.