Automotive Lubricants Market

Market Overview

The global automotive lubricants market size was valued at USD 79.45 billion in 2022. It is estimated to reach USD 124.31 billion by 2031, growing at a CAGR of 5.10% during the forecast period (2023–2031). 

The automotive lubricants market is witnessing considerable changes due to the shift in customer preference toward high-performance automotive lubricants that can increase fuel efficiency and deliver superior performance. The rise in the use of passenger cars in emerging economies has also fueled the growth of the global automotive lubricants market.

Automotive lubricants are fluid substances that reduce friction between surfaces and protect automobile components from wear and strain. Engine oils, transmission fluids, process oils, lubrication oils, and general industrial oils are some of the most common automobile lubricants. They are available in mineral, synthetic, semi-synthetic, and bio-based oil varieties, formulated using specialized lubricants and additives derived from petroleum to prevent oxidation and corrosion. These lubricants contribute to reducing heat generated between components and enhancing the performance and functionality of vital components, such as engines, hinges, bearings, and hydraulic gears. They are also utilized in the production of brake and fuel systems, stamped body parts, and transmissions.

Market Dynamics

Global Automotive Lubricants Market Drivers

Rapid Growth in Urbanization and Middle-income Population

As per the World Bank, about 75% of the global population resides in middle-income countries, and the population across middle-income countries is increasing annually by 1%. The migration of people from rural to urban areas has also increased significantly in recent years, which is the primary reason for the rapid acceleration of urbanization. As urban areas develop swiftly, cities account for over 80% of the global GDP.

The rapid pace of urbanization has fueled the middle-class population's purchasing power, positively affecting various markets, such as the automobile sector. According to OICA 2020, about 25.3 million cars were sold worldwide, including passenger and commercial vehicles, with market shares of 80.0% and 20.0%, respectively. Thus, the rise in automobile sales has propelled the demand for automotive lubricants and positively impacted the global market. 

Surge in Demand for Group II and III Base Oils The global base oil market expansion has shifted the demand from Group I base oil to Group II and III base oils, mainly attributable to strict lubricant regulations and the high demand for energy-efficient lubricants. The European Automobile Manufacturers Association has also laid down new efficiency and emissions regulations for European automobile manufacturers, propelling the demand for Group II and III base oils.

Factors such as lower viscosity, sulfur content, and a higher saturation of chemical bonds have enabled Group II and III base oils to have a broader range of applications than Group I base oils. Group II and III base oils have antioxidant properties that protect engines from wear and tear and are efficient raw materials for producing automotive lubricants. 

Global Automotive Lubricants Market Restraint

Unavailability of Raw Materials for the Automobile Industry

There is a considerable shortage of electronic chips, and raw materials like steel have affected the automotive sector. Such an acute shortage of raw materials is causing issues such as the high cost of raw materials, which may lead to a complete shutdown of manufacturing units and result in a decline in sales volumes.

In addition, the shortage of raw materials is forcing companies to cut back on some important electronic features, which are valuable additions to their products. During the COVID-19 outbreak, several automakers faced major supply chain disruptions associated with procuring raw materials such as rubber, leather, steel, and fiberglass. Consequently, such factors restrict market growth. 

Global Automotive Lubricants Market Opportunities

Increasing Demand for Passenger Vehicles in Emerging Economies

Over the past decade, the automotive markets in India, China, Brazil, and South Korea have witnessed rapid growth due to exponential innovation in the global automotive market in terms of markets, production capacity, and competitive standards. According to the International Organization of Motor Vehicle Manufacturers or Organisation Internationale des Constructeurs d'Automobiles (OICA), since 2005, the automobile sector has shown rapid growth in emerging economies due to the availability of low-cost raw materials and skilled labor and high foreign direct investment (FDI). 

Additionally, several automotive manufacturers have invested in R&D initiatives due to the emergence of new technologies and regulations. For instance, in 2020, Tata Motors and Hyundai's R&D spending on passenger vehicles was recorded at USD 406.79 million and USD 3.93 billion, respectively. Such R&D initiatives will enable these companies to launch passenger cars that are more appealing to the market. Thus, all these factors have played an instrumental role in the rise in demand for passenger vehicles in emerging economies, in turn creating opportunities for market growth.

Regional Analysis

Based on region, the global market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia Pacific Dominates the Global Market

Asia-Pacific is the most significant global market shareholder and is anticipated to exhibit a CAGR of 5.16% during the forecast period. In Asia-Pacific, China, India, Japan, and Singapore have emerged as major markets as governments in these countries have promoted foreign direct investment. Factors such as high purchasing power, strong economic growth, government subsidies and grants, and the surge in automotive and construction activities have supported market growth in the region. In addition, China and India are Asia-Pacific's biggest markets. India is an evolving market attracting local and international investors due to relaxed government

regulations, initiatives such as "Make in India," and a strong manufacturing hub for textile, transportation, mining, and food processing industries. The availability of low-cost labor and the lower cost of production have added momentum to the emergence of India as a leading market for automotive lubricants.

North America is estimated to exhibit a CAGR of 4.74% over the forecast period. The North American automotive lubricant industry has significantly shifted over the past few decades. The region is the largest producer of oil and gas and the second-largest producer of automotive vehicles worldwide. North America also accounts for a significant revenue share in the global automotive lubricant market because of the high production and processing of oil and gas. Countries such as the US and Canada have contributed to the region's high demand for automotive lubricants.

Furthermore, the North American automobile sector is predicted to attract significant investments throughout the forecast period, stimulating the growth of the regional market. Stringent environmental regulations enforced by regional governments will also encourage vehicle manufacturers to invest extensively in R&D initiatives. For instance, manufacturers such as Ford Motors (the US) and General Motors (the US) have invested over USD 34.5 billion in R&D projects.

Europe is one of the largest and most developed regions, home to countries such as the UK, France, Italy, Germany, and Spain. The Industrial Revolution has enabled unprecedented development in the region regarding the standard of living, per capita income, advances in the production process, and the adoption of new technologies. All these factors have also contributed to the development of world-class automotive, construction, agriculture, and transportation industries in the region, accelerating the demand for automotive lubricants.

Mexico and Brazil have the highest revenue shares in the Latin American automotive lubricant market. Factors such as increasing oil discoveries, a growing automotive industry, and increasing oil exploration activities in Brazil, Mexico, Argentina, and Venezuela drive the demand for automotive lubricants in the region. The Latin American automotive industry was severely disrupted due to the COVID-19 outbreak. During the first half of 2020, the sales of light vehicles declined by at least 29% from the same period last year. Despite declining sales, Latin America contributes to 3.2% of global light vehicle sales, boosting the demand for automotive lubricants.

In the Middle East and Africa, the primary factors contributing to the market's growth include the abundant availability of crude oil reserves, highly established infrastructure, and the presence of top-notch players in the region. Saudi Aramco, Qatar Petroleum, Gulf Petroleum Group, and Abu Dhabi National Oil Company are some of the prominent players offering base oil in the Middle East and Africa. South Africa, Iran, and Iraq are the largest producers of automotive lubricants in the region, accounting for around 93.58% of the region's overall production capacity.

Segmental Analysis

The global market is segmented by product type, vehicle type, and oil type.

Based on product type, the global market is divided into engine oil, transmission fluid, hydraulic fluid, and others. 

The engine oil segment is the most significant contributor to the market and is estimated to exhibit a CAGR of 5.14% over the forecast period. Engine oil is the most prevalent type of automotive lubricant utilized in internal combustion engines, which are widely used in vehicles. Engine oil plays an essential role in engine performance as it offers protection against wear and tear to moving parts in an engine. Base oils and additives impart various properties to automotive lubricants like engine oils. Mineral, semi-synthetic, and fully synthetic are the three primary categories of engine oils.

Transmission fluid is manufactured using base oil and an additive package that contains a wide range of chemical compounds designed to offer the required qualities of a certain transmission fluid standard. Most transmission fluids contain a combination of lubricant-improving additives, such as anti-wear additives, rust and corrosion inhibitors,

detergents, dispersants, and surfactants, which protect and clean metal surfaces. Transmission fluids must be specific to a vehicle's make, model, and year for optimal performance.

Based on vehicle type, the global market is divided into commercial vehicles, two-wheelers, passenger cars, and others. 

The commercial vehicles segment dominates the global market and is predicted to exhibit a CAGR of 4.56% over the forecast period. Commercial vehicles such as trucks, buses, vans, heavy transport trailers, and other automobiles are considered under this segment. A commercial vehicle's primary function is to transport products, materials, and passengers. Commercial vehicles have complex functions, requiring good quality automotive lubricants to perform better. In September 2020, Mercedes-Benz signed a contract with automotive lubricant manufacturer Petronas. In 2017, Volvo partnered with Castrol to deliver high-quality automotive lubricants designed to deliver better vehicle performance and meet environmental regulations worldwide.

Two-wheelers serve the purpose of utility and mobility and offer greater fuel efficiency than cars. Two-wheelers run on ICEs, requiring automotive lubricants to stay in good condition. Some two-wheelers use disc brake assembly and, therefore, require brake fluid, whereas some two-wheelers use drum brake assembly, which requires lubricant grease for smooth operation. A two-wheeler's engine is a compact assembly that delivers power directly to the rear wheel through chain assembly. Unlike cars and commercial vehicles, two-wheelers do not have a transmission and gearbox and do not require transmission fluid and gear oil.

Based on oil type, the global market is bifurcated into mineral oil, fully synthetic oil, semi-synthetic oil, and biobased oil. 

The mineral oil segment is the highest contributor and is anticipated to exhibit a CAGR of 4.34% over the forecast period. Most mineral oil-based automotive lubricants are derived from API-grade group I, Group II, and Group III base oils. Mineral oil-based automotive lubricants account for the highest demand for base oils. These lubricants include 

approximately 75%-85% of base oil and several additives such as dispersants, anti-wear additives, and detergents. The availability of mineral oils with different viscosities enables players in the global automotive lubricant market to offer a wide range of products.

Fully synthetic or synthetic oil consists of chemical compounds artificially modified by mixing many synthetic components. Synthetic oil is a good substitute for mineral oil products as it offers a similar temperature range. These lubricants provide better engine performance and protection compared to conventional automotive lubricants. Also, synthetic lubricants are specially formulated with additives to provide additional performance benefits such as reducing sludge deposit buildup, reducing wear, and high operating temperatures.

Recent Developments

• May 2023- Lumax Auto Technologies Limited, a manufacturer of automotive systems and components, introduced a new line of lubricants and coolants for passenger vehicles, two-wheelers, three-wheelers, and commercial automobiles.
• March 2023- Uno Minda announced the introduction of its engine oils for two-wheeled vehicles on the Indian market. The manufacturer has confirmed that these lubricants are compatible with BS-VI vehicles.