The size of these shops varies, usually starting from 100 square feet, and they are filled with various automobile products, lubricants and mechanics tools. However, the owners and vendors make good use of the space available in front of their outlets, with mechanics repairing motorcycles on the road most of the time.

But what is the significance of such shops? They are among the key places where lubricants reach the customer, and they play a crucial role in determining the sales of Indias national oil companies – Indian Oil Corp. Ltd. and Hindustan Petroleum Corp. Ltd. – as well as private players like Castrol India Ltd., Gulf Oil Lubricants India Ltd., Shell India Markets Private Ltd. and Savita Oil Technologies Ltd.

According to Sushmita Dutta, project lead energy and petroleum at Kline & Co., 50 to 55 percent of motorcycle oil in the country is sold through retail outlets, including bazaar sales to local repair garages. About 35 to 40 percent is installed at dealerships and other franchised and branded workshops. Factory-fill accounts for about 10 percent of sales.

India consumed 2.3 million tons of lubricants in 2015 and is the worlds third-largest market. And the availability of marketers products in these retail outlets can have far-reaching consequences on their business. Sales of two-wheelers in the country jumped 40 percent to 16.45 million units in 2015-16 from 11.76 million units in 2010-11, according to the Society of Indian Automobile Manufacturers (SIAM).

Growth is driven by rising disposable income, demand in rural markets and access to financing. With rising two-wheeler sales, it is vital for lube marketers to establish a connection with these shops to ensure their oil is purchased.

Distributors are the key links to reach these retailers, said Vikram, business strategy manager for lubes at Bharat Petroleum Corp. Ltd., which sells MAK-branded lubricants. (Vikram goes by a single name.) Every market is different, and distributors have their own way of reaching retailers and independent shops. They do the marketing and enrollment of retailers, he said in an interview. Advertising is part of every marketers business strategy, but retailers need to be convinced about taking the product as well as on payment terms, and thats where distributers pitch in, he said.

For Castrol India, a subsidiary of British oil major BP, its the long association with dealers, including independent shop owners, and trust in product quality that results in consumer pull and makes the shop owners sale easier, said Kedar Apte, vice-president of marketing at the company. Mumbai-based Castrol, the countrys leading lubricant company, sells products under Castrol Activ, Castrol Go! and Castrol Power1 brands in the two-wheeler segment.

The younger generation, especially, is quite active on digital platforms. We activate innovative social media and other digital platforms to engage with consumers to create pull for our brand at the dealers and independent workshops where we are present, Apte noted.

Incentives & Credit Terms

Reach alone is not the deciding factor in boosting lubricant sales. The incentives and credit terms distributors and retailers get to promote the products also play a key role. Therefore, marketers resort to schemes such as dealer loyalty programs, mechanic loyalty programs and special credit terms to entice them to sell their products. It varies from market to market. Since its very specific to the market, the distributors do it, Vikram said.

According to independent workshop owners and bazaar operators we interviewed, incentives are based on reaching certain sales volume targets. This is addition to receiving longer credit terms from distributors, who in turn receive higher dealer discounts from companies.

The shop owners will sell only those products where they will get more profit. Viscosity grade will be the same, but there could be some difference in quality, said Hetal Shah. He has been in the business for 21 years and runs Yash Automobiles, an outlet dealing in two-wheeler parts and lubes in Mumbais western suburban area Mira Road.

Sameer Shaikh, owner of A-1 Motors, agrees. Shaikh, who repairs two-wheelers and sells automobile products, stated that he switched to selling Motul-branded lubricants from Shell on the insistence of his distributor. I have a long association with him. He sends me the goods when I need them. He also gives me credit for up to Rs 2 lakh for two to three months, he said.

OEM & Mechanics Influence

Advertisements by marketers help to increase brand awareness for their products, but customer choice is largely influence by original equipment manufacturers and mechanics recommendations, industry executives said. Its always better to follow OEM recommendation to get the maximum benefit, said Ajith Kumar, general manager at TVS Motor Co., Indias third largest two-wheeler manufacturer.

The Chennai-based company sells lubricants under the TRU4 Premium brand and recommends SAE 10W-30 SL-JASO MA2 grade oils for its motorcycles. According to trade executives, most OEMs have moved to JASO MB type engine oils for scooters.

Trade executives noted that OEMs also offer free maintenance for one year at their authorized service center when customers purchase the vehicle. This aids in influencing the customers subsequent lubricant buying decision and also benefits OEMs immensely because they not only earn good margins on such products but also have the opportunity to establish their brands in the minds of customers. According to trade executives, OEM genuine oils constitute around 30 percent of the market.

The Trust Factor

Trade executives and analysts said that customers utilize the OEMs free services while they are available. But, thereafter, most usually shift to the bazaars and independent shops for the upkeep of their vehicles. Klines Dutta said that people generally seek assistance from mechanics in deciding the lubricant type and brand because most owners lack relevant knowledge.

Manish Gupta, a resident of Patna in Indias eastern state of Bihar, trusts his mechanic to do the job. I only ride the bike and then take it for servicing. I trust the mechanic and go by his advice. He also changes the engine oil in front of me. Who has the time to open the vehicle and check the engine oil? he asked.

Shajil Kumar, who lives in Indias IT hub Bengaluru, said he generally takes his motorcycle to the service center for an oil change after every 5,000 kilometers. I go by the service stations recommendations, he added. Several Mumbai-based motorcycle owners, who have been riding for a long time, said that they prefer to go to the mechanic for their work.

Independent workshops usually charge Rs 10 to Rs 20 to change the engine oil, but they also do it for free if customers buy the oil from them. An oil change takes only about 10 minutes.

Prem Seti, who has been selling lubes and greases for the past 12 years and owns Bell Lubricants retail shop in Mira Road, said that motorcycle owners should change the engine oil after every 2,500 to 3,000 km to get the maximum fuel efficiency and engine performance. Bhagraj Chaudhary, who runs Roshan Auto Parts outlet, said that only about 10 percent of customers know what type of oil they should use in their two-wheelers, so most ask their mechanics.

Shaikh of A-1 Motors agrees. Out of 10 customers, 7 listen to us while 3 tell us which product they want, he said, adding that 20W-40 grade is most popular in the market. He cautioned that oils designed for motorcycles should not be used in scooters because they adversely affect fuel efficiency.

Scooter engines are located under the seat and run much hotter due to poor air circulation. Customers must use thin oil in scooters to get the maximum benefit, said Shaikh, who has been in business for 14 years.

Castrols Apte noted that awareness about technical details is increasing among young consumers in India, the worlds second largest two-wheeler market after China. They are becoming more involved in the decision about which lubricants they use.

Grades & Market Outlook

According to Klines Dutta, viscosity grade 20W-40 and 10W-30/40 are the two most popular in India. She noted that 20W-40 is most suited for the 100 to150 cubic centimeter segments, which constitute a large part of the two-wheeler population in India. SAE 10W-30 is recommended by OEMs for newer and technologically advanced engines and specifically for new scooters, Dutta added.

Apte said that lubricant demand from rural India has witnessed rapid growth due to increased prosperity over the last few years. Also, easier vehicle financing options have increased two-wheeler sales by about 50 percent in these markets. He added that gearless scooters are also growing rapidly in the urban market due to their adoption by youth, including young women because they offer convenient and hassle free riding. We see growth in both segments, motorcycle as well as scooter engine oils, Apte stated.

He noted that the affluent segment in large cities is driving growth of premium bikes. As a result, the premium end of the lubricant market is also poised to grow. Apte said that growth of superbikes and high-performance bikes is resulting in demand for synthetics and semisynthetics as well as higher viscosity oils that can withstand higher pressure and temperature.

Kline expects the countrys total demand for motorcycle oil to grow at a compound annual growth rate of 6 to 7 percent between 2015 and 2019. The size of the two-wheeler lubricant market in India was 200,000 to 250,000 tons in 2015. The consultancy said that the increased demand will mirror the rise in the two-wheeler population, which is likely to grow at similar rates in the forecast period.

We believe that two-wheeler growth in India will be driven largely by the scooter segment, which has witnessed double digit growth since 2011. We expect a much slower growth rate of 3 to 4 percent for motorcycles, Dutta said.