Quick Lubes Sprouting in China


Car ownership continues to spread in China, and so does the popularity of a cheap, convenient oil change.

That is adding up to rapid growth in the number of quick lubes, according to a new study by Kline and Co. The study, Business Opportunities in the Chinese Lubricants Market, 2004-2009, predicts the number of quick lube centers will grow at an average annual rate of 17 percent over the next five years.

Traditionally, Chinese car owners would go to the dealership or buy motor oil at a store and take it to a garage for changing, the director of Klines Shanghai office, Li Wang, said in an announcement issued Monday. But as the quick lubes concept becomes more widespread, people are opting for a standardized level of service at a lower price than car dealerships offer.

China is the worlds second-largest lubricant market, with annual demand of 4.5 million metric tons, according to Klines estimate. The consumer segment is relatively small, comprising just 10 percent of that total. But it is increasing fast, thanks to growth rates of between 10 percent and 15 percent annually in purchases of new vehicles – most of them privately owned passenger cars.

Kline, which is based in Little Falls, N.J., said the central government is contributing to the growth of the quick lube market by closing small, independent auto service shops.

[T]he Chinese government is working to upgrade the standard of car repairs by eliminating thousands of mom-and-pop garages all over China, Project Manager Frans van Antwerpen said. In order for these garages to survive, they could upgrade to become a certified quick lube center. The lube marketers are going out and upgrading these small garages, providing marketing materials and contracting for exclusive use of their products.

Caltex has the biggest quick lube chain in the country, with more than 2,000 franchised garages, said Geeta Agashe, director of Klines Petroleum and Energy Practice. BP is a distant second with approximately 560, followed by Tongyi Beijing Petroleum Chemical Co., the domestic independent marketer of Monarch brand lubricants, which has 490 centers.

The study also concluded that Chinas automatic transmission fluid (ATF) market is growing and underserved and therefore presents an opportunity to multinational producers.

Right now, ATF is not being produced in China, but the number of cars with automatic transmission[s] is growing, van Antwerpen said. This is another great opportunity for multinational lubricant manufacturers to capitalize on one of the fastest growing automotive markets in the world.

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