Why Shell Remains a Market Leader in 2019 and How Lubricant Suppliers Can Capitalize on the Shifting Mobility Ecosystem

Global-lubricant-industryPARSIPPANY, NJ – November 7, 2019 – Kline’s just-published Global Lubricants Market Analysis forecasts volume growth in the global lubricants market to remain flat for the foreseeable future. While that is a known paradigm, what is unclear is how suppliers should act to seize hidden niche opportunities. To get information on current opportunities, ATTEND Kline’s complimentary webinar, taking place on November 21, 2019.

In 2018, the global demand for finished lubricants reached 40.5 million tonnes, with automotive oil products accounting for more than 50%.  The two largest markets, the United States and China, accounting for 39%, will still have the biggest impact on product trends. However, a number of industry trends—including trade tensions, economic pressures, increased vehicle electrification, and the growing use of synthetics—are continuing to suppress volumetric growth.

The leaders in the lubricant industry keep their fingers on the market pulse, tapping into a range of opportunities. Shell, a leader in the industry for over a decade now, remains the leading global supplier of automotive and industrial lubricants.

“There are many reasons why Shell remains the market leader in 2019,” notes George Morvey, Industry Manager at Kline. “Some examples include a complete automotive and industrial product portfolio of conventional and synthetic lubricants, the #1 overall market share in the United States and #3 in China, the leading position in the quick-lube segment in the United States, global distribution coverage through direct and indirect channels, and an HDMO product offering that enjoys strong global brand loyalty from sectors such as owner-operators.”

“Shell’s growth strategy for lubricants is working. Our balanced portfolio of market leading products and growing digital services are enabling us to build business across all market segments and demonstrate the resiliency of our business in an increasingly dynamic global lubricants market,” said Huibert Vigeveno, Executive Vice President, Shell Global Commercial. “The Kline report shows that we are widening our lead over our main competitors and I am particularly pleased with the growing demand for our premium lubricants and our growth in the industrials segment.  We have been focusing on what our customers need and adapting our offer accordingly, which is resulting in material earnings growth and contributing resilient free cash flow to the Shell Group.”

BP acquires the United Kingdom’s largest electric charging network, Chargemaster, and rebrands it BP Chargemaster, building up the position of a supplier of all fuel and vehicle types. This one-stop shop is now a destination for fuel (liquid or electric)—and will be in the future—but also for sales of branded PCMO/HDMO, which is an important sales outlet in many countries.

TOTAL launches a line of fluids for EVs under the Quartz and Rubia brands toward the end of 2018, strengthening its positions in electric mobility. Other suppliers quickly respond to this new automotive ecosystem. Shell follows with its global launch of branded fluids for EVs, and Petronas enters the space, announcing its IONA branded product line in 2019. Most recently, Valvoline launches its Valvoline EV Performance Fluids line.

ExxonMobil bets on the Asian two-wheeler market and acquires PT Federal Karayatama with the objective of entering the MCO space in Indonesia. In June 2019, Indonesia’s Ministry of Industry implements the Indonesian National Standard (SNI) on lubricants; it aims to promote the use of quality products and reduce the use of fake/counterfeit productsm while encouraging foreign suppliers to set up domestic lubricant blend plants to increase domestic production.

The Indonesian SNI is an example of one of the key trends impacting developing markets. The introduction of government initiatives that aim to limit imports in a drive toward self-sufficiency can be observed in other country markets.  In Russia, an import substitution policy has been implemented with the end goal of limiting the import of finished lubricants, especially synthetics, while “encouraging” consumers to support domestic Russian suppliers. Similar issues are evident in India and China, where the “Make in India” and “Made in China 2025” initiatives aim to help local- and state-owned manufacturers provide their products to consumers. These initiatives offer stiff competition to international players and create competitive disadvantages and barriers to entry for organizations without a local presence.

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About Kline

Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the agrochemicals, beauty & personal care, chemicals & materials, energy, and life sciences industries for 60 years. For more information, visit www.KlineGroup.com.

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