Interested in the lubricant industry in Asia?

Subscribe now to Lube Report Asia. This FREE weekly e-newsletter features breaking news and base oil price reports.

July 6, 2018

Volume 7 Issue 4

    View Printer Friendly Article Bookmark and Share

Southeast Asia Shifts to Better Engine Oils

SINGAPORE – Automotive engine oil demand in Southeast Asia is gradually shifting from obsolete grades to higher quality products, a Lubrizol official told an industry conference here last week. But lubricant marketers could probably help accelerate the process by cooperating with service workshops.

“The engine oil market is forecast to continue to move towards high quality levels,” Paul Nai, Lubrizol’s director of product management for Southeast Asia, told the ICIS Asian Base Oils & Lubricants Conference. “Passenger car engine oils will shift to lighter viscosity grades.”

In moving toward more modern engine oils, Southeast Asian markets will also shift toward lighter products, Nai said. By 2021, 10W-XX products will have the largest share of the passenger car motor oil market, 39 percent, followed by 5W-XX at 13 percent, Lubrizol forecasts. In the heavy-duty engine oil segment, 15W-XX oils are expected to account for 41 percent of demand, followed by monogrades with 31 percent and 10W-XX with 9.7 percent.

The main drivers of engine oil viscosity change in the region are the growing popularity of environmentally friendly cars – such as hybrids and electric vehicles – and Japanese cars. “The Japanese are trying to market lighter-viscosity oils, and so there is a trend,” he said.

However, use of obsolete engine oils is still rampant. In 2016, 44 percent of lubricants in use in American Petroleum Institute service categories now considered obsolete. Thirteen percent of passenger car engine oils were obsolete grades of SH and below while 42 percent of heavy-duty engine oils were designated CG-4 and below, which API has also declared obsolete. According to API, SH is considered not suitable for use in most gasoline-powered automotive engines built after 1996. CG-4 is considered not suitable for use in most diesel-powered automotive engines built after 2009.

By 2021, the market share of passenger car engine oil of service category SH and below will fall by almost half to 7 percent, and heavy-duty engine oil of service category CG-4 and below will fall to 30 percent.

Indonesia, the largest lubricant market in Southeast Asia, is shifting from motorcycles to cars, with sales of motorcycles falling since 2014. However, “influencing vehicle owners to use the right lubricant remains a challenge,” said Nai.

Lubrizol found that 79 percent of car owners surveyed decided which brand to use before going to the workshop, and 64 percent of car owners chose the brand based on recommendation from friends or family.

“The consumers’ mindset is about lubricating a motorcycle, and how will that affect the lubrication of cars?” he asked.

Lubricant blenders can collaborate with workshops in many ways. Training is one. “You see motorcycle maintenance at the roadside and oils in [soda] bottles along the road. Consumers will fall back on their experience with a particular oil or brand, and this will probably continue when they get a car,” he said.

Stock management is another issue. “Workshops in Indonesia carry all kinds of brands. Because you have so many brands, how do you manage quality?” he asked.

“Consumers go by what they have in their experience with a brand. Not API [service category] or quality levels,” he added.

Consumers in Thailand are also transitioning from motorcycle to car ownership. But unlike in Indonesia, 70 percent of workshop owners in Thailand stock only one or two engine oil brands. “This is the direct opposite of Indonesia,” he added.

Lubrizol’s research found 42 percent of workshop owners would like to have better or newer workshop equipment, and 30 percent would like to have more technical training for their mechanics. “They are more concerned about their business, how the workshop looks, instead of the type of oil,” said Nai.

”Workshop owners have concerns beyond stocking engine oils,” he added, hinting that lubricant blenders consider working with workshops to meet those needs.