Last year, the number of new vehicles sold in Asia – cars, trucks and motorcycles – came to 88 million, with China taking more than half of these, or 45 million units, followed by India (with 18 million units) and Indonesia (9 million). Passenger vehicles and commercial vehicles took the lead in sales growth, with 9 percent and 2 percent increases respectively, while motorcycles recorded a slight drop in sales of 1 percent.
When one descends from a birds eye view down to the individual country level, though, Asia is a fragmented market with varying approaches to emissions legislation and implementation, and a wide mix of vehicles and consumer behaviors, points out Colin Morton, product manager, engine oil additives for Asia-Pacific, at Lubrizol Corp.
The worlds largest lubricant additive producer, Lubrizol has headquarters in Wickliffe, Ohio, and owns and operates manufacturing facilities in 17 countries with sales and technical offices around the world. Last year, the company started up commercial operations at a new additive component manufacturing and additive package blending facility in Zhuhai, Guangdong, China.
In a presentation to the 8th ICIS Base Oils & Lubricants Conference in June in Singapore, Morton said he finds Asia to be a dynamic and changing market, with diverse factors propelling each countrys demand for lubricants. One major factor in all cases is emissions legislation, yet each country in Asia is in a different phase of regulating its air quality.
Lubrizol research shows that generally most countries in Asia are basing their passenger car emissions legislation on European emissions standards. The exceptions are Japan and South Korea, both of which are already advanced emissions control markets, said Morton. Other advanced markets include Australia, Thailand, the city of Beijing, China, and 20 cities in India; all of these have adopted the Euro 4 or Euro 5 emission standard for passenger cars.
Less far along, Morton added, are passenger car emission standards for Vietnam and Philippines. These will move to the advanced Euro 4 or 5 emissions control levels by 2017, while its unclear how long Malaysia and Indonesia will remain on the more basic Euro 2 level.
Based on the above scenario, Morton predicts, By 2020, it is estimated that over 250 million cars in Asia will have been designed for an advanced level of emissions control.
The mandates for heavy-duty vehicle emissions follow the same geographic lines, with Japan, South Korea, Australia, Thailand, Beijing (China) and 20 cities in India being advanced emissions control markets at Euro IV or V levels. Meanwhile, other countries are moving at their own speeds.
Apart from their common need to reduce emissions, each market in Asia must be viewed individually to help in understanding what drives lubricant demand in the region overall, and for predicting how quickly market forces will move. Morton reviewed the engine oil markets of seven countries around the region, and revealed some of Lubrizols market research statistics at the conference.
China
China has a population of 1.35 billion with 51 percent living in an urban environment; the number of cars per 1,000 people is 60. According to a Lubrizol study of passenger car mechanics and owners in China, car owners in China are very involved in the selection of engine oil for their car. At the time of their first oil change, 63 percent of Chinese car owners choose their own oil, selecting from a range of options or requesting a specific brand by name. Another 36 percent ask the mechanic to choose for them, but only 1 percent changed their oil themselves.
By the time of their second oil change, 80 percent of car owners in China ask to choose their own oil or select the brand, 18 percent follow the mechanics advice on oil, and 2 percent change their own oil. And by the time the car is out of warranty, 94 percent of owners are making the oil selection themselves, but most still rely on the mechanic to do the service. Only 2 percent are in the do-it-yourself category.
As there were more than 140 million passenger vehicles, 18 million commercial vehicles and 150 million motorcycles and scooters on the road last year, Morton believes the engine oil market in China is upgrading in performance as new vehicle hardware, emissions and fuel economy legislation is introduced.
Currently, most engine oils sold in China meet the API CF-4 specification for heavy-duty diesels, and API SJ, API SG or even lower for passenger cars. For cars, the most popular viscosity grades are SAE 15W-40 and 20W-50, and trucks mostly favor 20W-50 and monogrades.
However, demand is growing and shifting inland as the vehicle population grows, he noted, and OEMs are also introducing high performance engines and advanced aftertreatment systems that will require higher performance and more fuel efficient engine oils.
At the same time, as China IV [emissions standard] is introduced for heavy-duty vehicles, engine oils will need to provide greater soot-handling, leading to increased usage of API CH-4 and API CI-4 diesel engine oils. China will see a greater usage of high performance additive packages and performance polymers to formulate high performance oils, he added.
Japan
With over 90 percent of its people living in urban areas and 453 cars per 1,000 people, Japan is a mature, high-performance and light-viscosity grade market that quickly upgrades each time a new engine oil specification is introduced. A study done here by Lubrizol showed that roughly half of passenger car engine oils in Japan are blended now to the lightweight SAE 0W-16 and 0W-20 viscosity grades while another 38 percent are SAE 5W-XX.
Eighty-four percent of Japans gasoline engine oils have stepped up to the latest API SN specification, and 9 percent meet the still-current API SM. Only 7 percent are API SL or below.
Lighter oil grades are also favored for heavy-duty diesels, Lubrizol finds, with much of Japans 17-million-strong commercial fleet operating on SAE 5W-30, 10W-30 and 15W-40. Most of these oils conform to the countrys JASO DH-2 specification, rather than an API C-series or JASO DH-1, which are fading out.
According to Morton, Japans appetite for automotive lubricants will remain relatively stable with a strong demand for low-viscosity grade oils which meet the latest specifications. He expects the country to lead Asia in making the upgrade to the next-generation ILSAC GF-6 oils, when they are introduced.
Thailand, Vietnam, Malaysia
In Thailand, Malaysia and Vietnam, the percentage of people living in an urban environment is less than half (39 percent); together they have a combined population of 191 million people and 37 cars per 1,000 people. The lubricant market for each of these three varies according to its mix of vehicles in use, emission mandates and consumer preferences.
The vehicle park of the three countries was made up of 18 million passenger vehicles and 9 million commercial vehicles in 2012, plus an overwhelming population of motorcycles and scooters that was recorded at 62 million last year.
Vietnam stands out as the fourth-largest motorcycle market in Asia and has the highest motorcycle ownership rate per 100 people. In fact, 95 percent of this countrys vehicles are motorcycles. So it should be no surprise that in Vietnam, demand for lighter viscosity grade, 10W-XX oils for motorcycles is growing, Morton told the conference.
The market in Thailand, he went on to say, has some unique characteristics, too. This is the second-largest market for one-ton pickup trucks in the world, and demand for high performance 10W-XX oils designed for diesel pickups continues to grow. Over 40 percent of all vehicles sold are pickups, with many being used as private vehicles, he explained.
As for Malaysia, which has Asias third-highest rate of car ownership, volume demand for automotive lubricants is expected to grow steadily. However, the country remains a basic emissions control market, observed Morton, which suggests that oil quality levels may also hold steady.
Indonesia
About half of Indonesias 254 million people live in urban areas, and this country has about 10 million passenger cars, 7.5 million commercial trucks and more than 76 million motorcycles and scooters, said Morton.
Overall, the lubricant market in Indonesia is at a low to medium quality level, he added. Lubrizols analysis of interviews with car owners across the country reveal an engine oil market that is heavily influenced by consumer brand preference. A strong majority (79 percent) of car owners decide which oil to use before they even go to the workshop, and the others choose from whats on offer when they get there. Of the former group, 64 percent were influenced by recommendations from family or friends, 45 percent had used the brand before, and 32 percent were influenced through advertising. A mere 14 percent use the oil stated in their vehicles handbook. (In answering, respondents could select multiple options.)
Morton expects both scooter sales and passenger car sales to continue to grow, with over 90 percent of the cars being Japanese vehicle brands.
As new cars enter the market and scooter sales grow, the need for new engine oil technology will grow, resulting in greater usage of high performance additive packages and performance polymers to formulate car and scooter oils, he predicted.
Australia
This island nation has 127 million people, Morton said, and the highest rate of vehicle ownership of all countries reviewed: 540 cars per 1,000 people.
He sees increasing numbers of diesel vehicles in Australia, and hence a growing need for lubricants that can service light-duty diesel passenger cars and commercial vehicles alike. Based on motor vehicle census data from the Australian Bureau of Statistics, he noted that the number of diesel passenger cars in Australia has more than doubled over the past five years, to 8 percent of its car park in 2013, while the number of light-duty diesel trucks increased by over 60 percent in that same period.
In addition, the country will be moving to Euro V from 2016, and then on to Euro VI standards to cut its emissions. As the use of light-duty diesel engines grows, new engine oil technology will be needed, said Morton.
Common Threads
Generally, its expected that engine oil performance levels will continue to improve across Asia. There will be a greater demand for lighter viscosity grades and OEM-approved lubricant formulations for passenger cars and heavy-duty diesels, Morton said, while motorcycle and scooter owners will increase their usage of light-vis oils with JASO MA2 and JASO MB approvals, respectively.
The regions base oils will feel the impact of these changes, too, resulting in a shift from API Group I towards Groups II and III – especially as lubricant formulators work to improve thermal stability and viscometrics.
On the additives side, Morton foresees greater use of high-performance additive packages combined with new performance polymers to enable lubricant marketers to formulate lighter viscosity fluids. These fluids will have to provide improved efficiency, lasting fuel economy and optimal protection, without compromising durability for modern hardware.
Although Asias lubricant markets are developing and upgrading at quite different rates, he added, the total number of vehicles in use is expected to double by 2020.
The drive towards greater use of higher performance, more efficient, lighter viscosity grade engine oils in Asia is clear, Morton concluded.