Market Trends of United Arab Emirates Lubricants Industry
Engine Oil Dominates the Market
- Engine oil, or engine lubricant, is one of the various substances used to lubricate internal combustion engines to ensure good performance. Engine oil can be synthetic, mineral, or semi-synthetic in nature but is always made of a unique composition of base oil and additives.
- Mineral engine oils are derived from crude petroleum and contain hydrocarbon, oxygenated or non-oxygenated, and may also contain sulfur or nitrogen. Synthetic oils are created chemically in the laboratory but can also come from refined petroleum. The composition and production complexity of synthetic oils makes them high-end oils with higher performance compared to mineral oils. Semi-synthetic oils are a mixture of synthetic and mineral oils, but different semi-synthetic products may have different mix compositions.
- The engine oil product type dominates the lubricants market in the country because of the high demand from the transportation or automotive end-user industry. All kinds of vehicles with a combustion engine require engine oil to function properly and to ensure a long life.
- According to Waverley Exhaust & Brake, most auto manufacturers recommend engine oil changes once each year or 20,000 km on petrol engines while diesel engines and turbo charged petrol engines should be changed every 6 months or 10,000 km.
- In September 2023, Motul, one of the world’s leading companies specializing in the formulation, production, and distribution of high-tech engine oils, announced the launch of its NGEN range of engine oil in the Middle East. The NGEN range is made of bio-sourced and premium regenerated base oils for passenger hybrid cars and motorbikes, respectively. The lubricant range made from renewable, non-fossil sources limits the engine oils' environmental impact and reduces its carbon footprint significantly during the manufacturing process.
- Moreover, in October 2023, Goodyear Lubricants and Alonsa Electric introduced API SP grade engine oil at Automechanika Dubai 2023. Goodyear Lubricants showcased a diverse range of over 100 varieties of Goodyear engine oils and specialties lubes totaling over 400 SKUs for sale in the Middle East, Africa and parts of Asia.
- Moreover, the automotive market in the UAE is dominated by the vehicles based on internal combustion engines that use either gasoline, diesel, or are hybrid in nature. This simultaneously indicates a high volume demand for engine oils across the country.
- Also, the country has a large market for used cars as they have always been a cheaper alternative to buying a new car. Factors such as people's increasing preference to own a vehicle, growing disposable income, and a rise in the number of players offering affordable, quality used cars are driving the growth of the used car market in the UAE. This can lead to a further increase in demand for engine oils because as the engine of a vehicle starts to get old, its engine oil demand also increases gradually.
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Expanding Automotive and Transportation Sector
- Automotive and other transportation media, such as aircraft and marine, are the largest markets for lubricants. Engine designs are continually improved to enhance performance, increase efficiency, and meet environmental emission regulations.
- Light-duty vehicles include two-wheelers and passenger cars. Engine oils, gear oils, transmission oils, greases, and compressor oils are the most widely used lubricants in the automotive sector.
- Some major functions offered by engine oils are resistance against corrosion and wear and tear to ensure increased engine life and better performance; reduction of friction; increase in engine performance; reduction of fuel consumption; removal of impurities and achieving engine cleanliness; optimizing engine efficiency; and preventing energy loss by providing optimum cooling.
- Due to the persistence of very high temperatures in the United Arab Emirates, thicker engine oils are widely used. The usage of thin oils leads to the quick exhaustion of oils and engine damage.
- The country's aerospace and marine segments contribute majorly to the demand for engine oil. In December 2022, Abu Dhabi Ship Building started the production of new vessels for navy. It includes the manufacture of Falaj Class vessels for UAE Navy, which is likely to increase the demand for lubricants in the country.
- Furthermore, the country's aerospace is also expanding significantly, thus positively impacting the market for lubriants in the UAE. In July 2022, Strata- a major aircraft manufacturer in the Abu Dhabi received new business from Swiss plane maker Pilatus. Strata aims to add six more production lines for aerospace sector-related manufacturing.
- Moreover, the Abu Dhabi government has announced a USD 2.72 billion investment across six industrial programs to more than double the size of the UAE's aircraft manufacturing industry to USD 46.83 billion over the next eight years.
- Additionally, the country witnessed an increase in the sales of passenger cars. For example, more than 150,000 vehicles were sold in the first half of 2022.
