What challenges would that vehicle mix present to lubricant blenders and marketers? While some marketers look at Europe for clues, other signals can be discerned from Australia, where light-duty dieselization is a fast-growing trend.

A near-doubling of Australias diesel-powered passenger and light commercial vehicle parc in recent years has created increased demand for lubricants for light-duty diesel engines.

Australias population of light-duty diesel vehicles had grown to 3.1 million vehicles in January 2015, from 1.4 million in 2009, according to the Australian Bureau of Statistics latest vehicle census. The biggest shift has been in the light commercial vehicle category, including pickup trucks and vans of not more than 3.5 metric tons. Today, better than half of such vehicles run on diesel in this market.

Some of the key priorities for fleet managers are driver safety, reducing costs, enhancing productivity, green-fleet initiatives and managing fuel price volatility, explained James Organ, managing director at ACA Research. Moving to diesel talks to four of these. ACA is an Australian-based market research company with clients including vehicle manufacturers such as Mercedes, Toyota, Ford and Isuzu and petroleum companies including BP, Caltex and Shell.

The surge in the number of diesel-powered vehicles in Australia together with the introduction of increasingly stringent environmental emissions limits means a raft of new formulations for engine oils have been introduced, splintering the lubricants market. This trend to diesel is not unique to Australia. In Europe, approximately half of passenger cars run on diesel. India and other countries in Asia and elsewhere have light-duty parcs that are shifting in that direction, too.

Diesel engines require higher-performing engine oils than gasoline-powered engines simply because of design differences.

The bottom line is that diesel engine oils are formulated differently than gasoline engine oils because of the differences in the combustion process, engine loading and fuel chemistry, said Gary Parsons, global original equipment manufacturer and industry liaison manager at lubricant additive supplier Chevron Oronite in California.

Diesel engines inject diesel fuel under high pressure into cylinders filled with compressed air, causing spontaneous combustion that drives pistons. These explosions generate soot and particulates to a significantly greater extent than those occurring in gasoline-powered engines, which are ignited by sparks. Therefore, one of the primary characteristics of diesel engine oil is its ability to disperse soot in the oil and provide wear control while loaded with soot.

Dispersant additive levels in diesel engine oils are typically higher than those used in gasoline engines, to prevent soot and contaminants from agglomerating. Because diesel-powered vehicles are typically light commercial vehicles, on the road all day, the wear control performance of the engine oil is also paramount. In addition, diesel engine oil also has to combat the fuels higher sulfur levels to neutralize the formation of corrosive acids.

Australians, and fleet operators in particular, turned to diesel technology when the price of petrol (gasoline) spiked in 2008 to a record AU $1.60 per liter – roughly $4.45 per gallon in U.S. dollars. Suddenly, everyone was talking about fuel economy.

Fleet managers got smart and started thinking, Maybe a four-cylinder isnt the best option; I could get a diesel to reduce fuel costs, said Ken Thompson, research and communications director at the Australasian Fleet Management Association. He said that, as a rule of thumb, diesel running costs could be as little as half that of a gasoline-powered fleet vehicle.

Meanwhile, in Europe, more fuel-efficient diesel engine technology had advanced dramatically so that the big, dirty engines used in trucks had been made quieter and smaller and were now being installed into passenger vehicles and small vans.

In addition, increased spending power of the Australian dollar against the Euro in the wake of the 2008 recession meant that European vehicle manufacturers, including Mercedes-Benz, Renault and BMW, started bringing diesel cars and vans to Australia in bigger numbers. Audi and Volkswagen sales in Australia doubled in the five years to 2013. Japanese manufacturers, including Toyota, also boosted diesel-powered vehicle exports to Australia.

The bulk of diesel engine vehicles sold are light commercial, said a spokesman for Caltex Australia, the countrys largest lubricant blender. These vehicles require diesel engine oils more akin to HDDEO [heavy-duty diesel engine oil] technology.

The light commercial fleet in Australia went from 36 percent diesel powered in 2009 to 54 percent in 2015, according to the Australian governments vehicle census. Numbers-wise, diesel-powered light commercial vehicle registrations grew to 1.56 million vehicles in 2015, from 862,000 in 2009 – an 81 percent gain. Meanwhile, passenger car diesels grew even faster, more than doubling in number.

The influx of European vehicles and the phasing in of new emissions standards has also contributed to the fragmentation of the nations engine oil market.

Theres a lot more complexity, said Greig Herden, technical manager at Hi-Tec Oils, a 25-year-old Australian owned business headquartered in Smithfield, New South Wales. There are a lot more products today compared to five years ago, he said, adding that the number of engine oils on the market had probably doubled. It means blenders, importers, distributors, mechanic workshops and retailers having to store a lot more products on their shelves and in tanks and warehouses. Hi-Tec got its start in a garage, blending lubricants for diesel engines and now has operations in every region of the country.

New emissions standards are driving engine technology, which in turn is driving engine oil development. From 2016, Australias emission standards will incorporate so-called Euro V emission limits, referring to European Union regulations developed to curb emissions from passenger and light commercial vehicles. Further, Euro VI limits will apply in Australia a year later.

One of the key challenges for diesel engine oil technology in reducing emissions is controlling particulates. This has meant increased need for high-performance additives and performance polymers as oils are formulated for hard-working diesel engines.

The higher dosage of additives in diesel engine oils compared with gasoline engine oils means diesel oils tend to cost more. They are also more expensive to develop because diesel oil standards typically include more tests than their gasoline counterparts, said Chevrons Parsons.

The shift toward diesel power has also pushed Australias engine oil market to rely more on ACEA Oil Sequences, the specifications developed by the European Automobile Manufacturers Association (ACEA). Traditionally, U.S. and Japanese models dominated Australias car parc, so the market used API engine oil categories administered by the American Petroleum Institute and recommended by North American and Japanese automakers. But this has led to gaps in market coverage because the only API diesel specifications are for heavy-duty trucks.

While the United States has very few diesel-powered light-duty vehicles, the numbers are much higher in the European Union because diesel fuel is markedly cheaper – thanks to tax policies meant to encourage engines that generate less carbon dioxide. Its natural, then, that Europes auto industry developed oils to lubricate light-duty diesel engines.

ACEA Oil Sequences C2 and C3 are the specifications commonly recommended for diesel passenger cars like the Volkswagen Golf or the BMW-3 series. The C indicates oils formulated with low and medium levels of SAPS – sulfated ash, phosphorus and sulfur – in order to better accommodate emission control technologies such as diesel particulate filters and exhaust gas recirculation.

The older ACEA B4 specification is commonly recommended for light commercial vehicles such as Mitsubishis diesel-powered Triton.

The emissions standards currently in the process of being adopted are driving the hardware developers, and thats driving the specifications for new engine oils particularly in the mid SAPS, said Tony Lawton, industrial and product development manager of 89-year-old Australian engine oil blender Penrite Oil Co. in Studfield, Victoria.

Adding to the complexity, most European vehicle makers are developing their own engine oil specifications, said Chevron Oronites Parsons. This has become a significant factor due to the flood of European vehicles entering the Australian market.

The market for general-spec lubricants is eroding, with the volume transferring to the large number of OEM-specific blends now available, agreed Caltexs spokesman.

This tendency for vehicle makers to cite their own proprietary specifications for engine oils means that larger, multinational lubricant suppliers that work with OEMs have an edge over local blenders that may be struggling to compete, said one Europe-based lube supplier, speaking on condition of anonymity.

Caltex Australias spokesman says it was among the major lubricants suppliers that adopted formulations for modern, low-emission engines where specifications for both gasoline and diesel power were required. This can now be done without compromise in lubricant performance, as was the case with older-technology dual-spec products. Modern engines typically need to be catalyst-compatible and meet manufacturer-specific efficiency targets. Both gasoline and diesel specs are required on a single product to reduce product complexity for workshops.

The Caltex Havoline Synthetic range now has more than nine separate products across a variety of viscosities and industry specifications. These products also carry a number of formal OEM approvals, from manufacturers including General Motors, Ford, Volkswagen/Audi, BMW, Mercedes-Benz and Porsche – manufacturers with a significant number of diesel models in their passenger car line-ups.