North American Lubricant Market Tapping Value, but Re-refined Oils’ Potential Under Exploited, Finds Kline

PARSIPPANY, NJ, SEPTEMBER 6, 2012–Although it is estimated that there will be a 3% increase in tonnage carried by private fleet operators in the United States through 2016, this is expected to translate to a marginal increase in commercial lubricant consumption according to Opportunities in Lubricants, 2011-2013: North American Market Analysis - Volume I: Commercial Automotive recently published by global consulting and research firm Kline & Company.

On-highway activity saw a surge in the latter half of 2010 that continued well into 2011. Similarly, the lackluster performance of the construction industry between 2008 and 2010 has begun to show signs of a rebound. However increased service implementation of longer drain interval oils due to a higher penetration of synthetics, growth in oil analysis practices, and an overall increase in commercial vehicles’ mechanical efficiency, mean that commercial lubricant consumption is expected to fractionally increase by a compound annual growth rate of just 0.4% to 1.0% to 2016.

Shell remains the leading supplier of lubricants in North America and accounts for an estimated 12% of the market share in 2011, followed by ExxonMobil, Chevron, and BP.

With the growing realization of the multifarious benefits of synthetics and their consequent steady uptake, value is rising while overall demand is being suppressed through inherently longer service intervals. Similarly, oil analysis, the laboratory analysis of a lubricant's properties, suspended contaminants, and wear debris, is being increasingly performed during routine preventive maintenance to provide meaningful and accurate information on lubricant and machine condition. By tracking oil analysis sample results over the life of a vehicle, lubricant consumption is optimized.

Re-refined engine oils are slowly making their way into the commercial automotive segment; however a majority of respondents participated in survey for the research cited concerns about OEM approvals of such grades and the possible non-availability on the highways, as major deterrents. In particular, the U.S. commercial trucking industry generally appears not yet prepared to accept re-refined oils; with a majority of equipment/maintenance managers interviewed conceding that reliability and logistics issues are prime considerations and impediments.

A number of farmers and farm cooperatives interviewed for this study showed minimal interest in using re-refined oils, believing that lubricants made out of re-refined basestocks are of an inferior quality. However, Tushar Raval, Kline’s Energy Practice Project Lead, notes the opportunity, “An immediate connect can be made by the way of marketing re-refined oils as ‘sustainable’ products and consequently more easily find favor from the farmer community.” Raval continues by suggesting, “Another—and certainly critical—way of successfully propagating the acceptance of these grades is by way of approvals and recommendations from OEMs, such as John Deere.”

With the imminent launch of the PC-11 HDMO category by 2016, Kline sought in its research to assess the current level of awareness and knowledge of this significant change. The general consensus is that the commercial segment is moderately aware of PC-11 and intends to adopt and comply with OEM engine oil recommendations as applicable to their respective fleets and operations when PC-11 becomes a reality. In the interim, it’s simply business as usual.

Kline’s Opportunities in Lubricants, 2011-2013: North American Market Analysis - Volume I: Commercial Automotive is an industry respected in-depth analysis of automotive finished lubricant products, end-use industries/trade classes, major suppliers, and market trends in the United States plus summary coverage of Canada and Mexico.

About Kline
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