Top Facts You Didn’t Know About Automotive Engine Oil market & Impact of COVID-19

Posted by Mrudula Karmarkar on August 17th, 2022

The global automotive engine oil market is estimated to reach USD 47.70 billion by 2030 according to a new report by Grand View Research, Inc. Growth can be attributed to the emerging need for high-performance engine oils due to tactical vehicle mechanisms and operational blueprints being implemented by multinational automobile manufacturers. Additives are used to improve the properties and performance of the oil. Additives are characterized by their functions such as viscosity improvers, friction reducers, anti-oxidants, rust & corrosion inhibitors, anti-foaming agents, pour point depressants, foreign particle depressants, and extreme pressure additives, anti-wear additives, and acid neutralizers. Additives are selected according to the engine design and performance level. Engine manufacturers define the suitable API gravity of oil to be used for better performance and less wear & tear.

Manufacturing of the product requires low technical complexity but high initial infrastructure investment. High growth in automobile users globally has resulted in a significant demand over the past few years and this trend is expected to continue during the forecast period. These factors have resulted in the establishment of numerous manufacturers in the recent past. The Asia Pacific is expected to register significant growth in the coming years owing to the increasing automotive production in the countries like China, India, and Japan and the rising disposable income of the consumers in the region. According to the International Trade Administration, China is one of the largest vehicle markets in terms of manufacturing and sales. This is likely to drive the demand for the product in the coming years. Legislative initiatives taken by the political parties across North America and parts of Western Europe affect the overall transportation industry, energy, and power sector, and more, which directly hinders the smooth operations of the automotive industry in these regions.

This is attributed to growing automobile production and demand for synthetic and conventional products. Sales of the automotive vehicles are witnessing a constant growth over the past few years, majorly in Europe and Asia Pacific regions owing to the rising population and consumer spending capacity. The market is expected to witness substantial growth during the forecast period due to the high level of technological innovations implemented in the overall automotive industry. The emerging need for high-performance engine oils is ever-growing due to tactical vehicle mechanisms and operational blueprints being implemented by multinational automobile manufacturers.

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Raw materials such as base oil and additives are used in formulating the product. Crude oil exploration is mainly concentrated in countries such as Venezuela, Saudi Arabia, and Canada. Crude oil processing companies that are engaged in producing heavy carbon fraction and base oil are concentrated in the U.S., China, Russia, and Japan. Saudi Aramco, Marathon Petroleum, and Exxon Mobil are some of the key producers of the raw materials used in manufacturing automotive engine oil.

Automotive Engine Oil Market Report Highlights

• In 2021, fully synthetic emerged as the dominating grade segment by contributing more than 30% of revenue share. This is attributed to the better mileage and increased engine protection
• Diesel was the largest segment and is anticipated to register a CAGR of 3.1% by 2030, due to its higher reliability and lower maintenance cost.
• As of 2021, Asia Pacific was the dominating regional market owing to the growing population and rising industrial development which involves higher usage of heavy-duty trucks
• Heavy-duty vehicles segment is expected to expand with the highest CAGR both in terms of volume and revenue, as these vehicles need to handle a larger load as compared to the other vehicles

The global automotive engine oil market is characterized by the integration of raw material suppliers. Base oil availability is the major factor that influences the value chain consisting of the manufacturers. The starting material base oil is obtained from the fractional distillation of crude oil. Several multinationals have a well-established, integrated value chain and are engaged in manufacturing raw materials as well as supplying engine oils as the finished products. These companies are integrated across multiple stages of the value chain in order to maintain a continuous supply of raw materials and ensure low manufacturing costs.

A majority of the manufacturers are integrated across different stages of the value chain. Base oil and additives are the main raw materials employed in the manufacturing of the product. Thus, numerous manufacturers of the product such as ExxonMobil and Royal Dutch Shell produce their own base oil supplies to vertically integrate production.

The distribution channels in the market include third-party distribution channels, direct supply agreements to industrial users, and the company’s own distribution network. Direct supply agreements are getting popular as end consumers are entering into agreements with companies for ensuring uninterrupted supply and cost benefits through the foreseeable future. Third-party logistics has become a global phenomenon due to the presence of several multinational companies consuming variable quantities of the product. Some prominent players in the global automotive engine oil market include:

• Valvoline
• Wurth Group
• Castrol
• ExxonMobil
• Total
• Eni GmbH
• Amsoil Inc.
• Petronas
• Fuchs Petrolub