Market Trends of Base Oil Industry
Engine Oil Segment to Dominate the Market Demand
- The engine oil segment dominates the demand for base oil due to the growing demand for engine oil from automotive, power, heavy equipment, metalworking, chemicals, and others.
- Engine oils are widely used to lubricate internal combustion engines and comprise 75-90% base oils and 10-25% additives.
- They are typically used for wear reduction, corrosion protection, and smooth operation of the engine internals. They create a thin film between the moving parts to enhance heat transfer and reduce tension during the contact of parts.
- According to OICA data, the global production of motor vehicles in 2022 recorded 85,016,728 units. It registered an increase of around 6% compared to total motor vehicle production in 2021. This growth also propelled the base oil demand worldwide.
- According to OICA, global car sales grew to around 57.49 million automobiles in 2022, up from around 56.44 million units in 2021. Such growth in car sales will significantly benefit the base oil market during the forecast period.
- India is among the fastest-growing markets for motor vehicles. According to the Society of Indian Automobile Manufacturers (SIAM), automobile sales volume in India expanded by 20.36% in 2023 over the previous year. The demand for automobiles across regions is expected to increase year-on-year because of the increasing demand for personal transport among individuals.
- As a result, the above factors are anticipated to substantially influence the engine oil market in the future years.
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Asia-Pacific Region to Dominate the Market
- The Asia-Pacific region controlled most of the worldwide market share, with rising investments in the automobile sector in Malaysia, India, and Thailand. For instance, MG, a British brand owned by China's SAIC Motors and created in partnership with Thailand's Charoen Pokphand Group, is targeting Thailand with its first-ever pickup truck, the "Extender." It is expected to boost engine oil consumption in the area over the projection period.
- According to the China Association of Automobile Manufacturers, with 30.09 million units sold in 2023, China maintained its position as the world's largest automobile seller. This number also included overseas shipments, which grew by 58% to about 4.91 million units.
- As per the Japan Automobile Manufacturers Association (JAMA), in the half-yearly period in 2022, Japanese automotive manufacturers manufactured 4,917,289 vehicles. It was an increase of 35% compared to the same period in the year 2021.
- According to the Organisation Internationale des Constructeurs d'Automobiles (OICA), motor vehicle production in 2022 in the Asia-Pacific reached about 7% higher volume compared to 2021.
- Moreover, Asia-Pacific is the leading producer of automotives globally. For instance, according to the Organisation Internationale des Constructeurs d'Automobiles (OICA), China, India, Japan, and South Korea were among the top 5 countries in terms of car production volume in 2022.
- The automobile market in the Asia-Pacific is estimated to make significant growth during the forecast period because of the estimated growth in demand for motor vehicles driven by rising disposable income, government incentives encouraging people to buy electric and hybrid vehicles, changing life patterns, and other supporting factors.
- As a result, the factors above are projected to substantially influence the base oil market in the Asia-Pacific region during the forecast period.
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