Speaking here in November at the Lubricants Russia 2011 conference hosted by RPI, Mike Boyer of Lubrizol said that increased car sales are resulting in greater demand for high-quality oils in Russia and elsewhere in Europe. Emissions limits continue to tighten as new legislation is introduced, while new hardware provides significant challenges for engine oils, said Boyer, who is product manager for the additive company in Derby, United Kingdom.

Growing Market

In the first half of 2011, Russias automotive lubricants market amounted to 134 million liters, up 1.6 percent compared to the second half of 2010, according the Moscow consultancy Auto-Marketing.

Its value grew about 9 percent, compared to 2010s second six months, and in the first half of 2011 amounted to 29 billion rubles (around 707 million). The total value growth of the lubes sold in Russia is caused by inflation and higher finished lubes prices that in the first half of 2011 grew on average by 6 percent to 8 percent. To be more precise, in the first half of 2011, foreign branded finished lubes prices grew above 15 percent compared to the imported finished lubes prices in the second half of 2010, the consultancy said.

Russian lube producers have seen a decrease in their share of the domestic finished lubes market primarily as a result of a sales slump of domestic car brands. [The] vehicle fleet of the three leading domestic producers – Avtovaz, GAZ and AZLK – in the first half of 2011 decreased by almost 6 percent, while the vehicles fleet of the foreign branded cars in Russia rose 5.5 percent, Auto-Marketing said, adding that it is the reason why the sales of the imported automotive lubes fared well in Russia last year, while some domestic producers have seen a slump in their finished lubes sales.

In the first half of 2011, Rosneft and Delfin Group saw their sales volumes slump 7.4 percent and 0.2 percent, respectively, compared to the second half of 2010. Sales by Lukoil and TNK-BP increased less than 1 percent. Meanwhile, ExxonMobil, Castrol, Shell, SK-Energy and Liqui Moly all saw finished lube sales volumes in Russia rise between 1.3 percent and 4.3 percent.

Auto-Marketing also reported results of a study of engine oils for light-duty vehicles through stores and other sales points in Moscow – one of the countrys key automotive lubricant markets. The consultancy found that in the first half of 2011 Shell reclaimed its position as the leading supplier of conventional (non-synthetic) engine oils in the capital. In 2011s first six months Shell held 18 percent of that category, followed by TNK-BP which had 15.7 percent and Lukoil, with 12.5 percent.

Things were different in the semi-synthetic oils category in the first half of 2011, according to Auto-Marketings analysis, which covered sales of four-liter containers of oil. Germanys Liqui Moly accounted for 11.4 percent of sales of semi-synthetic engine oils in the Moscow market during that period. Lukoil ranked second with 11.4 percent, followed by Delfin Group, which holds 7.6 percent of the category with its Luxe brand.

In the synthetic engine oils category, Castrol was the leader in the first half of 2011 with a 12.8 percent market share, followed by ExxonMobil with 11.8 percent and Shell with 11.3 percent.

Nationally, Lukoil retained its leading position in sales of all automotive lubricants. The Moscow-based oil major held almost 27 percent of the Russian market during the first half of last year, Auto-Marketing found. ExxonMobil claimed second with 17 percent of the market, while Castrol and Shell were third and fourth with 8.7 percent and 8 percent, respectively.

Forecast Calls for More Cars

Car ownership in Russia has seen dramatic changes in the past three decades. From just under 31 cars per 1,000 people in 1980, there were 240 cars per 1,000 people in Russia in 2010, Lubrizols Boyer said. By comparison, there were 763 cars per 1,000 people in the United States in 2010 and 518 in Germany, while in China it was just 42 cars per 1,000 people.

Lubrizol predicts passenger car sales in Russia will continue to grow. From around 1.8 million vehicles sold in 2010, we forecast the countrys new car sales will grow to above 3.5 million in 2015 – almost double, Boyer said. The countrys peak sales year was 2008, when around 2.7 million passenger cars were sold, but 2009 saw record-low sales of fewer than 1.4 million units, due to the global recession and subsequent economic crisis in Russia.

Currently, this market is dominated by native Russian automaker Avtovaz, which enjoys a 23 percent share of sales. The No. 2 badge in sales is Hyundai with 10 percent.

Together, Western European automakers hold about 25 percent of Russias market, although none has a share larger than 6 percent. Yet by 2015, foreign companies could comprise about 30 percent of car sales. Volkswagen, for example, is expecting to double its market share from 4 percent in 2008 to 8 percent in 2015, while Frances Renault is expected to increase its sales from 6 percent in 2008 to 8 percent in 2015, Boyer said.

Emission limits in Russia continue to tighten across the entire country, Boyer observed, and in order to comply, Russia will need to use cleaner engines and aftertreatment devices such as diesel particulate filters which have long been in place in Western Europe. In 2010 over 70 percent of the car park in Western Europe was represented by vehicles meeting the Euro 3 specification or later, he confirmed.

Euro 3 standards were introduced in the EU in 1998. Euro 5 became effective in 2009 and is scheduled to be replaced by Euro 6 in 2014. Since 1970, when emission legislation was introduced in Europe it has been highly effective in the reduction of nitrogen and diesel particulate matter, Boyer said, adding that one car in the 1970s produced as much pollution as 100 cars today. Diesel particulate filters can reduce particulate matter emissions by 99 percent.

Faster, Hotter Engines

Advances in engine hardware, such as gasoline direct injection, turbocharging and advanced pollution controls will continue to drive demand for higher-quality lubricants throughout Europe, according to Lubrizol.

GDI involves injection of the gasoline directly into the combustion chamber, rather than into an intake port. It offers power and efficiency benefits, but requires engine oils with greater deposit protection and soot handling abilities, which means new detergent and dispersant technologies are needed.

Compact and hot-running turbo-charged engines demand greater protection against thermal degradation, and thus will need new antioxidant technology and high-quality base oils, Boyer observed.

Put these two technologies together – turbocharger plus direct injection (T-GDI) – and the benefits become even more pronounced. Adding a turbocharger gives the engine designer the ability to provide the right amount of air for optimum combustion. It further increases power and efficiency, Boyer said, and delivers twice as much power density as port fuel injectors.

However, the T-GDI engine runs even hotter and harder, leading to increased oxidation and a greater performance challenge for engine oil. Turbocharging increases the severity on the lubricant because a critically hot area for the oil is the turbocharger bearing. Furthermore, accelerated oxidation rates can lead to a rapid degradation of the oil, causing deposits in the turbocharger and other areas. Thats why this technology requires good kinematic viscosity, he said.

Another factor is the downsizing of engines. More torque from a down-sized engine means higher loads on smaller bearings, and it is a challenge to the lubricant film strength, Boyer said. Downsizing demands increased wear protection from the engine oil.

Almost all the engine technology challenges – sludge formation, piston deposits, fuel dilution, lower quality gasoline, higher soot levels, particulate emission, fuel economy demands, inlet valve deposits and emission control systems – are going to require improvements in oil additives such as dispersants, detergents, antioxidants and friction modifiers, he said, along with high-quality base oils.

In pursuit of better fuel economy, European OEMs already have moved to lower viscosity grades for light-duty vehicles, Boyer said. The OEMs today have a preference for SAE 5W-30 grades. Increased usage of 5W-30 and 5W-40 will result in greater demand for API Group III base oils. There is a continuing need as well for higher-performing, cost effective 10W-40s, which will result in a growth in demand for API Group II base oils, Boyer said.

Europes engine oil market is highly fragmented he added. The European Automobile Manufacturers Association (ACEA) maintains light- and heavy-duty engine oil categories, but Europes OEMs tend to layer their own requirements on top of ACEAs basic performance levels. BMW, Volkswagen, Daimler, GMs Opel division, Porsche, Ford, Renault and Peugeot/PSA all have their own engine oil specifications.

What they all have in common is a need for engine oil technologies to maintain durability and protect aftertreatment devices – so demand for high-quality engine oils is bound to rise.

While the car sales are continuing to increase, changing emissions legislation is affecting the type of vehicles sold. Market share of Western European OEMs continues to grow, and new engine and aftertreatment designs are being introduced that require higher quality engine oils, Boyer concluded.

New engine oil technology will be required to maintain durability, and demand for high quality engine oils will continue to rise.