There is at least one sub-segment, however, that is not expected to grow this year – lubricant demand for new cars. In fact, lube demand for new vehicles rose throughout the recession, only to fall in 2010, and now is forecast to fall further this year. The reasons for these counterintuitive trends lie in the way that analysts compile such statistics in Russia and in the maintenance habits of motorists there.

The estimates about lube consumption for new cars come from Russian Automotive Market Research. Tatyana Arbadzhi, a marketing expert with the Moscow firm, described its methods during a presentation at the Engine Oil and Automobile Chemicals conference held in St. Petersburg in November. RAMR begins by gathering national car sales data, she said, then compiles information about engine types and fluid capacities for all models.

RAMRs survey covered only new vehicles, which it defined as still under warranty – a period that typically lasts for three years in Russia. RAMR also assumed that motorists followed automaker recommendations for oil changes while under warranty – an assumption that is generally true in Russia.

Automakers in Europe generally recommend that the first oil change take place at 7,000 kilometers and all subsequent changes at intervals of 16,000 km. The average new car in Russia takes about two years to travel this distance. Your columnist can attest that most Russian motorists accumulate distances slowly. In the big cities they usually make short trips from home to the nearby commuter train to get to work and back. Longer distances are passed on weekends only, when people travel out of the town, often to dachas.

According to RAMR, then, one can assume that the average car owner will have his vehicles oil changed three times during the period when it is considered new. This schedule is set in motion once the vehicle is purchased.

Vehicle purchases in Russia were growing rapidly leading up to the recession – so rapidly that the country was on the verge of overtaking Germany as Europes biggest car market. As that happened, lube demand for new vehicles naturally increased, too. Car sales did drop when the recession hit, but motorists who had already bought vehicles continued getting oil changes that were counted in the new vehicle sub-segment. As a result, RAMR said, motor oil demand for new vehicles peaked in 2009 at around 40 million liters. This represented an increase of 24 percent from 2008, which had been 25 percent higher than 2007.

By 2010, though, vehicles purchased in the runup to the recession began falling out of the new category. As a result, lube demand for new vehicles fell 6 percent in 2010 to less than 38 million liters, RAMR estimated. The firm predicted that in 2011 the number will fall an additional 10 percent to around 34 million liters.

It is likely that the crisis will have the effect of decreasing lube demand for new vehicles in 2011, a result of the decline in car sales two years ago, Arbadzhi observed.

This conclusion was echoed by Sergey Udalov, executive director of Togliatti-based market research firm Autostat. The volumes of motor oil demand in 2009 have seen a surprising growth. However, the total value of this demand was significantly lower compared to 2008, as many motorists went to shop cheaper engine oils.

RAMR also said that foreign lubricant suppliers are benefitting from the growing popularity of foreign models of cars.

In 2009, for example, nearly 27 million liters of lubes were filled in the foreign cars crankcases, while almost 14 million liters were filled in the domestic cars, Arbadzhi noted. In 2010 their shares were around 26 million liters and slightly above 11 million liters, respectively. The market researcher expects 24 million liters of lube demand for foreign brands under warranty and roughly 10 million liters of lube demand for domestic brands under warranty in 2011.

Lube demand for new domestic cars is going downward, Arbadzhi said. Our survey observed that the majority of the foreign-branded vehicle owners prefer [premium] foreign brands of lubes for their new cars.

Russias cash-for-clunkers program has helped boost new car sales coming out of the recession. Over one million new passenger cars and light commercial vehicles were added last year to the Russian vehicle fleet, a 30 percent growth compared to 2009, Autostats Udalov told the Base Oils and Lubricants conference in Russia and the CIS in April.

The program, which has been very popular among Russian motorists, provides 50,000 rubles (around 1,250) toward a new Russian-built vehicle to individuals who turn in a car older than 10 years. Considering the tens of thousands of old, dusty and broken down Ladas standing idle on the sides of big city thorough-fares, this is quite a good deal for low- and middle-income Russians.

Autostat found that there were around 41 million light-duty vehicles in Russia at the beginning of 2011, including 34 million passenger cars and around seven million commercial vehicles. The firm projects the population will grow to 48 million light-duty vehicles by 2015, including 40 million passenger cars.

During this past decade, St. Petersburg evolved into a vibrant car manufacturing center, earning the countrys second capital the nickname Russian Detroit. Ford, GM, Nissan, Toyota and Hyundai all opened car assembly plants there. French Renault also opened a plant in Moscow in 2005, and GM has another plant in Kaliningrad. Some of these automakers also have joint ventures with Avtovaz and Gaz.

Apparently a lot of companies are betting that car sales in Russia will continue their bullish growth. If that happens, the drop in lube consumption for new cars will become a temporary blip. Long-term, that sub-segment of lube demand cannot helpbut rise, too.