Lingg, an executive board member of Mannheim-headquartered Fuchs Petrolub AG, said a close look at the regional lube markets for the past decade shows that “in volume terms overall, Europe and the Americas together lost what Asia Pacific and the rest of the world gained.”

From 1996 to 2006, Europe lost 11 percent of its lubricants volume and the Americas lost around 9 percent, while Asia Pacific and the rest of the world gained around 17 percent, he added.

In 2006, the mature markets in North America and Western Europe clearly were down from just the year before; in fact the markets of Central and Eastern Europe again surpassed the volume seen in Western Europe. Lingg explained that a key reason for this is that GDP in Western Europe has decoupled from lubricants consumption. Fewer lubricants are needed per unit of economic output as a result of higher-quality lubricants, longer oil drain intervals, and improved materials management.

“This suggests that for a highly industrialized and motorized region like Western Europe, that the more money people have in their pockets the more they go for sophisticated, high-quality lubricants and higher-performance, lifetime lubrication,” Lingg said.

By contrast, GDP and lube demand are still linked in Central and Eastern Europe, and the region’s economic growth is driving lube growth. “Lube demand here is up because of great industrial activity and a rapidly increasing vehicle fleet.”

Worldwide, lube demand was up 0.6 percent in 2006 versus 2005, Lingg said. The best performance came in the Asia-Pacific region, which saw its lube market grow 3 percent; the worst was Western Europe. He presented the following data, showing the breakdown of the global lubricants market by region:

Source: Fuchs Petrolub AG

Together, the world’s top 20 lubricants markets account for 75 percent of global lube consumption, Lingg said, and in terms of global rankings, the United States continues to be the world’s largest lube market, followed by China and Japan. On a per-capita basis, too, the United States leads the pack, consuming 24 kilograms of lubricants per person per year.

“North Americans are the world’s top consumers, due to their vehicle population, high industrialization and other volume drivers,” he pointed out. “Interestingly, the second-largest global lubricant nation — China — has the second-lowest per-capita demand, with only some 3 kilos per person. It is clear what this means in terms of future growth potential.”

Shifting from the demand side to the supply side of the market, Lingg and co-author Apu Gosalia, of the company’s Strategic Marketing department, estimated that the top 20 lubricant manufacturers supply around 66 percent of the world’s lubricant needs. That leaves just one-third for all the hundreds of other suppliers to scrap over.

Market leader Shell and second-place holder ExxonMobil together claim about 25 percent of the world market, Lingg observed.

The structure of the world’s lubricants industry has changed greatly since 1996, too, thanks to consolidation and mergers. In the mid-1990s, Fuchs counted approximately 200 majors (or integrated oil companies) and 1,500 lube independents having annual operations larger than 1,000 metric tons. “Since then, the number has decreased about 60 percent,” Lingg said, to just 720 companies worldwide (130 majors and 590 independents). “Consolidation still continues now, especially among smaller companies,” he added.

The Fuchs analysis went on to dissect the lubricants industry by size of participant. It listed just five major oil companies now with “very large” lubricants divisions making between 1 million and 5 million tons a year. In order of size, these are Shell, ExxonMobil, BP, Chevron and Total. In every instance, these companies’ size and market dominance can be attributed to mergers and acquisitions during the past 10 years: Shell with Pennzoil-Quaker State; Exxon with Mobil; BP with Castrol; Chevron with Texaco; and Totalfina with Elf.

The next tier of lubricant sellers includes 15 companies with operations in the range of 300 to 999 kilotons a year. They include major oil companies with mid-size lubricants divisions, such as ConocoPhillips, Lukoil and Petrochina, and a few large independents (Fuchs, Valvoline).

Before closing, Lingg turned the spotlight briefly to Brazil, Russia, India and China. These high-growth markets — collectively dubbed “BRIC” by the investment firm Goldman Sachs — have the potential to redraw the lubricants playing field, he indicated.

BRIC hold 40 percent of the world’s population, but so far only contribute 10 percent of global GDP. By contrast, the “Group of 6” industrialized nations (United States, Japan, Germany, U.K., France and Italy) share 60 percent of global GDP.

A 2003 Goldman Sachs study predicted the BRIC four would enjoy average annual growth of 5 percent to 10 percent, and as a group they’d surpass the G6 by the year 2050, in U.S. dollar terms. That original forecast has been accelerated, and BRIC now are expected to pull ahead by 2035.

BRIC’s markets are dominated by state-owned oil companies and multinationals, and the top 10 players accounted for two-thirds of lubricants consumption there in 2006. In order of size they were Petrochina, Sinopec, Lukoil, BP, Shell, ExxonMobil, Indian Oil, the now-defunct Yukos, Petrobras and Chevron, Lingg said. Many of these are active principally in their own domestic home markets, but a number of them have begun to look “westward” and have very aggressive merger and acquisition strategies.

“The BRIC itself have also begun the process of opening their doors to foreign international competition,” Lingg added, “which gives manufacturers and lube companies an opportunity to increase their participation in the region.”

He wrapped up by pointing to globalization, market concentration and consolidation as the biggest factors shaping the landscape of the lubricants industry. It’s still a fairly fragmented world, Lingg said, “and we will undoubtedly see intensified competition, more changes and significantly fewer players in the future.”