By Thomas F. Glenn

Although it took more than 40 years and many millions of marketing dollars, synthetic passenger car motor oils have finally moved into the mainstream. No longer very-high-priced, niche products valued primarily by car enthusiasts and motor heads, they now represent a sizable share of the market and are on a robust growth trajectory.

This spells good news for lubricant manufacturers and marketers because synthetics command a premium price and can return high margins. But it can also mean good news on other fronts. As synthetics become more commonplace, there is fresh opportunity to step out with a new product category that speaks to the evolving needs of PCMO customers and captures an even higher premium.

Appreciating this potential starts with a look at who the customers of PCMO are. Foremost of course is the consumer who actually owns the vehicle and selects the oil going into it. But the path from blender to ultimate end user is studded with other customer groups that must be satisfied along the way.

The first and arguably most important are the original equipment manufacturers. OEMs seek motor oils that provide optimal engine protection, fuel economy, emissions reductions and reasonable pricing. This is because the OEMS want to deliver durability to their customers, the car owners, while meeting the fuel economy and emissions mandates of the U.S. Environmental Protection Agency and other regulators.

Mass merchants represent another customer group, those big-box stores, auto parts chains, department stores and other PCMO retailers. Meeting their needs involves packaging, price and promotions, new SKUs, and myriad other issues.

Lubricant manufacturers must also serve their customers in the installed segment. These are the owners and operators of fast lubes, repair garages, new car dealers, and other facilities that change oil for a fee. Their needs revolve around price and promotions, support, equipment and more.

Another large and important group of customers are lubricant distributors, the feet on the street for motor oil brands. Their demands cover a wide range of issues around pricing, promotion, support, alignment, rebates, incentive funds, national accounts business, and others.

Lubricant manufacturers generally do an excellent job of serving each link in the value chain. With OEMs, additive companies and base oil suppliers, they help develop specifications and improve lubricant performance. They work closely with retailers and installers to assure they and their customers get what they want, whether it be 5-quart jugs, bag-in-box packaging, point-of-sale material, or something else.

Lubricant manufacturers also continuously seek innovative ways to meet the needs of the motoring public. One example of this was Valvolines creation of MaxLife, the first PCMO formulated especially for use in high-mileage vehicles. Heres another: On some front labels, Mobil has begun spelling out, in easy-to-understand language, that the PCMO is Recommended for most Hondas and Toyotas.

Synthetics are another example of how our industry has worked to satisfy both OEMs and end users who seek longer drain intervals and improved wear protection. But now that synthetics have carved out a solid place in the market and are beginning to commoditize, is there something more that customers want and are willing to pay a premium for – something new, different and maybe better?

Indications are that the answer may be yes. We are currently seeing companies stake out claims in what could be the next top-tier category: green lubricants.

Green can cover a lot of attributes, including biodegradability, renewable content, recycled content, energy savings, extended life, nontoxicity or any combination thereof. Vegetable oil based lubricants supply a number of these attributes, but theyve tended to suffer from two inherent shortcomings. Their long-chain fatty acids give relatively poor low-temperature flow characteristics, and their double-bonds reduce oxidative stability. This has restricted their operating temperature range and/or lubricant life.

New technologies, however, may hold the solution. Several companies have developed processes that selectively improve the molecular architecture of vegetable oils, and are championing these as high-performance base oils. Engine oils formulated with such renewable base stocks have even received American Petroleum Institute licenses.

These may appeal to several key customers in the value chain, starting with the OEMs. OEMs are environmentally conscious and sensitive to the demands of customers and EPA (which with the stroke of a pen could mandate renewable content for lubes). In addition, some renewable fluids are claiming to offer performance equivalent to that of synthetics derived from petroleum. This is of interest to OEMs, installers, retailers and marketers because it provides an opportunity to differentiate their product offerings.

In addition, green lubricants are expected to attract the rising tide of millennials. This market-savvy generation does significant research prior to purchases, using apps, Yelp, Facebook and other social media to guide and advise on purchases. And some millennials – perhaps a significant portion – appear willing to pay more for motor oils that combine superior performance with concern for Planet Earth.

That sounds a little like where synthetics were over 40 years ago: a high-priced, niche market with inadequate supply to meet potential demand. But if green, renewable synthetics are the next top-tier in PCMO, we now have plenty of time to think about how to define and analytically differentiate them from what someday might be called conventional synthetics.

Tom Glenn is president of the consulting firm Petro­leum Trends International, the Petroleum Quality Institute of America, and Jobbers World newsletter. Phone: (732) 494-0405. E-mail: tom_glenn@petroleumtrends.com