April 6, 2018
Volume 7 Issue 3
Malaysian Engine Oil Demand to Grow
Malaysian demand for automotive engine oil is expected to grow at a compound annual rate of 2.9 percent between 2016 and 2021 to 202,000 metric tons, the Freedonia Group predicted in a recent report. In 2016 demand totaled 175,000 tons.
A spike in motor vehicle ownership, coupled with increased average annual distanced traveled by light vehicles, medium and heavy trucks and buses, will cause the healthy demand growth, the Cleveland, Ohio-based research firm claims. Malaysian consumers also tend to follow original equipment manufacturing oil drain interval guidelines, which bolsters demand.
Consumer preference for higher quality synthetic and semi-synthetic oils and a trend towards newer vehicle ownership is weakening gains, however. Such products allow longer drain intervals.
The leading industry players are BP, Chevron, ExxonMobil, Petronas and Shell, although the Freedonia Group declined to identify specific market shares. Light-duty vehicles account for the greatest share of demand at 48 percent, followed by medium- and heavy-duty trucks and buses at 34 percent; motorcycles with 8 percent of demand; and off-highway equipment close behind at 7 percent.
Oils for medium- and heavy-duty trucks and buses should experience the fastest sales growth. “Increased shipping activity that accompanies economic expansion will drive gains. Additionally, growth will be supported by Malaysia’s dedication to improving its public transportation systems to reduce traffic and pollution problems caused by the high volume of cars on the road,” the report noted.
There has been speculation that Malaysia will reinstitute its End of Life vehicle policy. The policy, which aims to bolster the car manufacturing industry and to improve road safety, requires the retirement of older vehicles. If brought back, the policy will lead to increased drain intervals and a newer fleet of light-duty vehicles.
Local publications news outlets have downplayed the likelihood of the unpopular policy being revived, but some reported that Malaysian Transport Minister Datuk Seri Liow Tiong Lai presented to Parliament a proposal to incentivize owners of old vehicles to part with them and to purchase new ones. Parliament reportedly tabled the proposal.
The government implemented Euro 4 emissions standards for fuel quality in some fuels, although it will not be extended to the entire market until later this year. “However, the country has mandated that all commercial vehicles undergo a mandatory inspection that includes emissions tests once every six months, though passing levels are approximately equal to Euro 1 standards,” said Freedonia Industry Analyst Cory Bretz in an interview.
“Malaysia is sensitive to the effects waste oil has on the environment,” he added. The country’s Department of Environment licensed waste oil recovery facilities, but incineration continues to be the most popular method of disposal.