The period of rapid two-wheeler population growth appears to be over as the market matures in many countries. This is leading to a moderate growth expectation over the forecast period through 2024, globally. Due to the lack of an efficient public transportation system, especially in rural and semi-urban areas, Asia and Latin America will continue seeing strong growth in motorcycle, moped, and other two-wheeler sales. Owing to their commercial utility, easy manoeuvrability through traffic, and fuel efficiency, they are considered a utilitarian vehicle and continue to appeal to the urban populations. Similar to cars, shared mobility is gaining momentum in the two-wheeler market, although the shift has been slow. Interest in ownership of these vehicles remains strong due to the low cost. To learn more about this resilient market, REGISTER for our free webinar taking place on October 7, 2020.
In 2020, Kline expects two-wheeler sales to decline due to the social and economic impacts of the COVID-19 outbreak. The low- and mid-income segments of the population in developing countries make up a large percentage of two-wheeler users. This demographic is more dependent on daily wages and has a lower income and, thus, may have been more impacted during the lockdown imposed in many countries due to COVID-19. Nevertheless, the outlook through 2024 is positive. Driven by the demand for individual mobility, industry growth is expected to bounce back in 2021. According to Kline’s just-published Lubricants for Motorcycles, Scooters, and Mopeds: Global Market Analysis and Opportunities study, the global motorcycle oil (MCO) market is projected to increase at a compound annual growth rate (CAGR) of 1.8% from 2019 to 2024. This growth rate is lower than what has historically been witnessed, due to the disruption in demand in 2020 and contraction of China’s demand beyond 2020. North America will most likely register the highest growth in CAGR terms, but the Asia-Pacific region will have the highest volume growth. The two-wheeler population in Europe is expected to register the lowest growth due to dwindling sales and an aging two-wheeler population, along with an overall slowing in economic activity.
The increasing commercial use of two-wheelers is primarily driving growth in the MCO market. Using two-wheelers as taxis and courier/delivery services is increasing in almost all regions, not just in developing countries. E-commerce has been favorably affected during the COVID-19 pandemic as people have increased their online purchasing due to the stay-at-home policy in many countries. This change in consumer purchasing behavior is expected to be permanent, providing an impetus to further e-commerce growth and, thus, the use of two-wheelers for delivery services. Unlike personal-use vehicles, two-wheelers utilized for commercial transportation accumulate higher mileage and require lubrication more frequently, driving the MCO demand.
Key product growth segments are semi-synthetic and original equipment manufacturers’ (OEM) genuine lubricants. The MCO market, due to its sheer volume, is attractive to many industry participants, including vehicle manufacturers. The penetration of OEM genuine lubricants has significantly increased globally during the past few years. In India, genuine oils, the largest two-wheeler market globally, accounted for about 5%-10% of the country’s MCO demand in 2019. Almost every leading OEM (Harley-Davidson, Hero, Honda, Suzuki, TVS, Kawasaki, and Yamaha) has its own brand of genuine oils. Adoption of these oils varies according to the country, depending on their popularity, pricing, and the marketing efforts of the OEMs and their authorized workshops. Genuine oils have a higher usage preference over other merchant brands in countries such as Indonesia and the United States, among others.
A further penetration of genuine oils is expected to positively influence synthetics adoption, as the consumers of genuine oils are more likely to adhere to OEM recommendations. The global two-wheeler engine oil market continues to shift toward synthetic and semi-synthetic products, but the rate of shift varies within each region. In Europe, most lubricants used are synthetic and semi-synthetic. In North America, especially in the United States and Canada, most OEMs are recommending synthetics for their new high-performance motorcycles. In Asia-Pacific and South America, where most end users of two-wheelers belong to low- or mid-income segments, synthetics will continue to face challenges. However, with the increasing sales of automatic scooters and higher-cylinder-capacity vehicles in these regions, a shift toward semi-synthetic will also likely be witnessed.
While electric vehicle (EV) penetration is increasing globally, two–wheeler adoption volumes are very low and are insignificant in most countries. The only exception is China, which has experienced exponential growth in the electric two-wheeler population over the last five years. Hence, EVs are not seen as a significant MCO growth disrupter in the near future. However, the Indian government’s proposed move toward EVs, and other countries’ desire to promote EVs, could be detrimental for the industry beyond the forecast period. India is considering banning the sale of two-wheelers with less than a 150cc cylinder capacity, after March 2025, and allowing sales of electric two-wheelers after this date.
Other factors that are expected to shape the global MCO market include a shift in ownership and operation from motorcycles to scooters, especially among women; the restriction of two-wheeler movement in cities due to traffic issues; a shift from two-wheelers to other modes of transportation in countries where per-capita income is on the rise; and an increase in drain intervals due to greater usage of high-performance lubricants.