Engine Oil Market

Market Overview

The global engine oil market size was valued at USD 41.21 billion in 2024. It is estimated to reach USD 51.40 billion by 2032, growing at a CAGR of 2.8% during the forecast period (2024–2032). The global engine oil industry is primarily driven by the surging demand for high-quality engine oil to meet the stringent emission regulations set by several organizations to reduce harmful emissions. Furthermore, in the past few years, the increasing demand for passenger cars in emerging economies, driven by factors such as urbanization, rising middle class, and favorable government policies, has led to a surge in demand for engine oils, thereby creating opportunities for global market expansion.

Engine oil is a lubricating system explicitly designed for use in engines. It decreases friction between engine surfaces that come into contact with each other. It reduces energy waste caused by friction and is highly effective in cleaning, cooling, and protecting metal components from corrosion and rust. A good quality engine oil is critical for the proper operation of an engine as it enables smooth engine operations, prevents engine damage, and extends engine life. Engine oils are used in internal engine applications. An ideal engine oil ensures a clean and rust-free engine, improves fuel economy and performance, extends engine life, and reduces vehicle emissions. Gear oils, such as manual and automatic transmissions, are primarily used in car gearboxes. They comprise high-viscosity base oil and specific additives and protect gear components from intense mechanical pressure. Hydraulic oils are used in hydraulic machinery to transmit power.

Top 4 Key Highlights

• Fully Synthetic engine oil dominates the oil type segment.
• Gasoline engine oil dominates the engine type segment.
• Light Commercial Vehicles (LCVs) dominate the vehicle type segment.
• Asia Pacific is the highest shareholder in the global market.

Market Dynamics

Market Drivers

Rising Demand for High-Quality Engine Oil

Environmental agencies have stringent emission regulations for vehicles to reduce the environmental impact. Moreover, various engine oil manufacturers, such as Shell (UK), ExxonMobil (US), and Castrol (UK), develop products and production processes in a way that will meet emission regulations and improve their productivity and profitability. Therefore, the demand for good-quality engine oils has increased.

Companies invest in R&D to develop vehicles that reduce GHG emissions, have a low environmental impact, and deliver high performance. The engine oil business must work with automobile manufacturers to develop products compatible with each manufacturer's vehicle design and fall within the regulations set by various governments. In addition, global governments recognize the severe impact of vehicle emissions on the environment and human health and implement stringent rules on vehicle emissions. As a result, various companies, such as Valvoline (US), FUCHS (Germany), and Gulf Oil (US), invest in R&D to develop good-quality engine oils that will meet emission regulations. As a result, there is a significant need for engine oil of superior quality.

Market Restraint

High Demand and Production of Electric Vehicles

The high demand and production of electric vehicles (EVs) significantly impact the engine oil market. As the automotive industry gradually transitions to electrification, the demand for conventional engine oils, which are primarily used in internal combustion engines (ICEs), is expected to decrease. According to the International Energy Agency (IEA), In 2023, there was a significant increase in electric car sales globally compared to 2022, with a rise of 3.5 million units, representing a 35% year-on-year growth.

The increase in EV demand can be attributed to a number of factors, including government incentives, increased consumer awareness of environmental concerns, and advancements in battery technology. Electric vehicles (EVs) typically use specialized greases and coolants for their electric motors and drivetrain components, which require different lubrication than ICEs. Thus, the growing adoption of EVs has a negative impact on engine oil demand, as these vehicles do not require the same lubricants as conventional gasoline or diesel-powered vehicles. Thus, these factors are anticipated to restraint the global engine oil market growth.

Market Opportunity

Growing Demand for Passenger Cars in Emerging Economies

Emerging economies, such as Brazil, China, India, South Korea, Saudi Arabia, and Russia, are developing rapidly, increasing their per capita income. In addition, the infrastructure in emerging economies developed over the past decades is boosting the global automotive industry's production capacity and competitive standard. Regulations laid down by governments in emerging economies help increase the production capacity of the automobile industry. The recent COVID-19 pandemic fueled the demand for passenger cars as they are the safest mode of transport.

The automobile industry in emerging economies experiences immense growth because of low-cost raw materials, R&D investments, low cost of skilled labor, and availability of employment opportunities. As a result, automobile manufacturers, such as Hyundai, KIA, Mahindra, Tata Motors, SAIC Motors, and FAW, invest in R&D. These companies launch passenger cars with better performance and fuel efficiency, deliver high-value products at reasonable prices as customers are price-sensitive giving rise to the demand for passenger vehicles. Therefore, the high demand for passenger cars in emerging economies also increases engine oil demand, thereby creating opportunities for global 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 holds the largest share of the global engine oil market and is projected to experience significant growth during the forecast period. This expansion is primarily driven by the booming automotive industry in China, India, and Southeast Asian countries. China, as reported by the China Petroleum and Chemical Industry Federation (CPCIF), is the region's largest market, consuming 7.8 million metric tons of lubricants, including engine oils, in 2022. In India, the lubricant market is expected to grow at a compound annual growth rate (CAGR) of around 6% from 2023 to 2028, increasing from $5.6 billion in 2022, according to the Automotive Component Manufacturers Association of India (ACMA).

Furthermore, the ASEAN region, which produced over 4.2 million vehicles in 2022, according to the ASEAN Automotive Federation, sees high engine oil demand, with Indonesia, Thailand, and Malaysia leading the way. Moreover, the region's dominance in the engine oil market is underpinned by robust vehicle production and sales, rising affluence, and the presence of major automotive manufacturing facilities. Additionally, the significant population and urbanization trends across the Asia Pacific contribute to increased demand for both passenger and commercial vehicles, driving up engine oil consumption. These factors collectively highlight the region's crucial role in the global engine oil market, ensuring its continued growth and dominance.

North America stands as the world's second-largest engine oil market, with the United States and Canada at the forefront. In 2021, the US led the region by consuming approximately 2.4 billion gallons of engine oil, as reported by the Energy Information Administration (EIA). Canada's engine oil market, projected by the National Lubricating Grease Institute (NLGI), is expected to grow at a 3-4% annual rate, reaching $1.2 billion by 2022. This sub-dominance is driven by North America's vast vehicle fleet, encompassing passenger cars, trucks, and commercial vehicles, alongside the presence of key automotive manufacturers and lubricant companies.

Additionally, the demand for premium and synthetic engine oils is significant due to stringent emission regulations and a consumer preference for high-performance vehicles. The American Petroleum Institute (API) certifies and licenses engine oils in the US, ensuring adherence to high-quality standards and performance. Furthermore, the expansion of e-commerce and logistics industries has spurred demand for commercial vehicles, further propelling the engine oil market. Despite a 17.5% decline in engine oil consumption in 2020 due to the COVID-19 pandemic, the market is expected to recover and grow steadily, bolstered by the robust automotive industry and a continued preference for high-quality lubricants.

Segmental Analysis

The global market is bifurcated into oil type, engine type, vehicle type, end-user, and sales channel.

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

Fully Synthetic engine oil is anticipated to own the market during the forecast period. Fully Synthetic engine oil holds a dominant share in the global engine oil market due to its superior performance and advanced properties. Formulated with highly refined base oils and advanced additives, these oils offer exceptional lubrication, enhanced wear protection, improved fuel efficiency, and superior temperature stability. They meet the demanding requirements of modern engines, especially high-performance vehicles, and extreme operating conditions. The increasing preference for Fully Synthetic oils is driven by the need for extended oil change intervals, better engine cleanliness, and overall vehicle performance. Advancements in engine technology, stringent emission regulations, and a focus on fuel efficiency have further boosted demand. Major manufacturers invest in R&D to innovate and deliver high-quality, Fully Synthetic products, solidifying their market position. This superior performance has made Fully Synthetic engine oils the preferred choice, ensuring their continued growth in the engine oil industry.

Based on the engine type, the market is segmented into gasoline and diesel.

The gasoline engine oil segment dominated the global engine oil market due to the widespread use of gasoline engines in passenger cars, light trucks, and other vehicles. These oils are specifically formulated to meet the lubrication needs of gasoline engines, offering enhanced protection, performance, and efficiency. Gasoline engine oils reduce friction, prevent wear, and maintain engine cleanliness. The high volume of gasoline-powered vehicles on the road, particularly in regions with a high concentration of passenger cars and light vehicles, drives demand. Additionally, the increasing production and sales of gasoline-powered vehicles globally contribute to this dominance. Performance requirements, technological advancements, and stringent environmental regulations further boost the demand for high-quality gasoline engine oils, securing a larger market share compared to diesel engine oils.

Based on vehicle type, the market is segmented into passenger cars, light commercial vehicles, heavy commercial vehicles, and two-wheelers.

Light Commercial Vehicles (LCVs) dominate the market. LCVs are widely used for transportation, delivery, and logistics services, contributing to their high demand and, consequently, the need for engine oils. The growth of the LCV segment is driven by factors such as rising consumer class prosperity, rapid urbanization, and the increasing demand for goods transportation. Additionally, the demand for SUVs has surged in recent times due to the increasing leisure and tour activities globally, further contributing to the growth of the LCV segment. The LCV segment holds around 35% of the market share, growing at a CAGR of 2.3%. The dominance of LCVs in the engine oil market is established by their widespread use in various industries, including e-commerce, logistics, and transportation, which drives the demand for engine oils to maintain the efficiency and performance of these vehicles.

Based on end-users, the market is segmented into automotive and transportation, heavy equipment, power generation, and others.

Automotive and transportation is responsible for the largest market share over the forecast period.  Engine oils are essential in lubricating internal combustion engines, reducing friction, and ensuring optimal performance and longevity. The rising production and sales of passenger cars, commercial vehicles, and other transport modes globally drive the demand for engine oils. The transportation industry, including trucks, buses, and motorcycles, heavily depends on engine oils to maintain engine efficiency and reliability. Stringent performance requirements, regular maintenance schedules, and strict environmental regulations in these sectors underscore the need for high-quality engine oils to ensure smooth operations, minimize wear and tear, and enhance fuel efficiency. Consequently, the automotive and transportation sectors' growth directly influences the demand for superior engine oils, cementing their dominance in the market.

Based on the sales channel, the market is bifurcated into OEM and aftermarket.

The aftermarket segment contributed to the largest market share during the forecast period. This includes the manufacturing, remanufacturing, distribution, retailing, and installation of engine oils after the OEM sells the vehicle. The aftermarket is divided into DIY (Do-It-Yourself) and DIFM (Do-It-For-Me) channels. Factors driving this dominance include the growing number of vehicles, particularly in emerging markets, which boosts demand for engine oils. As vehicles age, the need for engine oil changes and maintenance increases, fueling aftermarket growth. Aftermarket engine oils are often more affordable than OEM options, attracting cost-conscious consumers. They are also widely available through retailers, wholesalers, and online platforms, enhancing accessibility. The trend toward digitalization and online sales further strengthens the aftermarket segment as consumers increasingly purchase engine oils online for convenience and cost savings.

Recent Developments

• April 2024- GoMechanic has formed a collaboration with ExxonMobil Lubricants (ExxonMobil). According to our understanding, GoMechanic will utilize ExxonMobil's broad expertise in engine oil technology.
• March 2024-Shell, another major player in the engine oil market, might announce a strategic partnership or acquisition to expand its product portfolio and capabilities in the realm of bio-based or renewable engine oils. With an increasing emphasis on sustainability and environmental concerns, there could be a growing demand for engine oils derived from renewable sources, such as plant-based or waste-derived feedstocks.