Market Trends of Engine Oil Industry
Increasing Demand from Automotive Industry
- Engine oils are widely used to lubricate internal combustion engines. They are composed of 75-90% base oils and 10-25% additives and are mostly used in automotive and other transport segments across the world.
- The major advantages of using engine oils are wear and tear reduction, corrosion protection, and the engine's smooth operation. They function by creating a thin film between the moving parts for enhancing heat transfer and reducing tension during the contact of parts.
- The increasing production and sales of light-duty vehicles are estimated with a direct impact on engine oil consumption. It, in turn, is anticipated to drive the demand for engine oil during the forecast period.
- According to the International Organization of Motor Vehicle Manufacturers (OICA), global motor vehicle production reached 85,016,728 units in 2022, and the production increased by 5.9% when compared to the previous year's data. Motor vehicle production growth year-on-year between the 2021 and 2022 markets was at 6%.
- Similarly, as per OICA, commercial vehicle production reached 57.49 million units in 2022 and registered growth when compared to 56.44 in 2021.
- Meanwhile, as per the Bureau of Economic Analysis of the United States Department of Commerce, light vehicle retail sales reached 13,754.3 thousand units, registering the lowest production when compared to 14,946.9 thousand units in 2021.
- Further, according to the German Association of the Automotive Industry (Verband der Automobilindustrie), automobile production in Germany reached 3.4 million in 2022 and registered a growth of 9.6% when compared to 3.1 million in 2021.
- As a result, the factors above are anticipated with a substantial beneficial influence on the engine oil market in the future years.
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The Asia-Pacific Region to Dominate the Market
- Asia-Pacific dominated the engine oil market primarily due to the huge growing demand for automotive production and power generation industries.
- China holds the title of the world's leading automobile manufacturer. The nation's automotive industry is poised for product advancement, emphasizing the production of vehicles aimed at enhancing fuel efficiency and reducing emissions, addressing escalating environmental concerns attributed to increasing pollution levels in the country
- According to the China Association of Automobile Manufacturers(CAAM), in 2022, approximately 23.56 million passenger cars and 3.3 million commercial vehicles were sold in China.
- Similarly, according to the India Brand Equity Foundation, in the financial year 2022, India's power generation capacity rose to nearly 400 GW. Thereby, the growth in generation capacity from the previous years continues. Between 1992 and 2022, the country's electricity capacity experienced a five-fold increase.
- As per Cabinet Office Japan, in 2022, the order value for heavy electrical machinery from manufacturers in Japan amounted to approximately JPY 2.25 trillion (~USD 15.22 billion), increasing from around JPY 2.15 trillion (~USD 14.55 billion) in the previous year.
- As a result, the factors above are projected to have a substantial influence on the engine oil market in the region in the coming years.
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