Written By: Eric Pimenta and David Tsui
According to the recently published Opportunities in Lubricants: China Market Analysis report from global market research and management consulting firm Kline, total consumption of lubricants in China is estimated at 7,000 kilotonnes, valued at an estimated USD 26 billion in 2015.
In China, the total consumption of consumer automotive lubricants in 2015 is estimated at 1,400 kilotonnes, valued at approximately USD 11 billion and forecast to grow 3.7% by 2020, with new passenger car sales growing 9.2% during the first half of 2016. This includes factory-fill for all product categories and greases.
In the consumer segment, engine oil is the leading product, accounting for over 1,200 kilotonnes, or 90% of the total volume and total value. Gear oil ranks a distant second with 4% of the volume, followed by ATF and grease. Shell is the largest supplier in 2015, capturing 14% of the market by volume. The domestic brand Sinopec ranks second.
In the engine oil category, the most popular viscosity grade is 10W-30 and 10W-40, typically with the SJ, SL, and SM API service levels. This viscosity grade 10W accounts for about 45% of the total volume of engine oil consumed by the consumer automotive market segment. The most popular type of gear oil is viscosity grade 80W-90, and the typical service level is GL-5. The major ATF type in the Chinese consumer automotive market is Dexron III. The major grease product type is lithium complex base grease used as factory-fills.
In China, the installed subsegment is the leading outlet for consumer automotive lubricants in 2015. An estimated 1,300 kilotonnes, or 93% of the total volume, are sold through this sector valued at USD 10.5 billion in consumer sales. Due to the minor share of the DIY market, retail outlets follow with an estimated 110.9 kilotonnes, valued at USD 592.1 million. Within the installed sector, repair garages, including both independent repair garages and authorized repair garages, are the leading class of trade, while in the retail sector, gas stations are the leading class and have overtaken auto parts stores in recent years.
According to David Tsui, a Project Manager in Kline’s Energy Practice, “The distribution channels for consumer automotive lubricants are split among direct, OEM, and distributor, in terms of the purchase channel of different sub-segments. Around half of the volume are sold to garages via distributors. Direct sales are mainly to the OEMs for factory-fill. The authorized repair garages mainly purchase from OEMs.”
The car population in China has reached over 150 million in 2015, an increase of over 12.5% compared to the figure in 2014. Since 2003, the rate of increase in the car population in China has remained at a high level, averaging over 11 million new vehicles per year.
Since 2009, the Chinese government has implemented several policies to stimulate consumption. In 2015, including tax reduction and the subsidies in the auto-to-rural policy, the favorable tax policy on the procurement of low emission cars supported the automobile market against the gradually decreasing growth rate in China.
“Although the consumer segment appears to be the best performing segment, there are opportunities for growth in the industrial and commercial segments as well. Companies will need to adapt to the governmental regulations and societal norms to prosper in this modernizing Chinese market,” adds Tsui.
These findings and more will be discussed in a complimentary webinar, which will discuss the recently published Opportunities in Lubricants: China Market Analysis report on Wednesday, February 8, 2017. If you are interested in joining us, please click here to register.