The industry is anticipated to be affected positively owing to the increasing demand for synthetic automotive engine oil. It is mainly considered to be a replacement for mineral based engine oil. This type of oil is experiencing high demand from the developed regions, such as Europe and North America.
It consists of chemically similar properties that of mineral based oil. Synthetic engine oil is capable of extending oil change intervals, decreases oil consumption, and enhances fuel economy. It is also less likely to oxidize, is not volatile, and is resistant to temperature change. However, increasing sustainability issues for the companies to exist in the highly competitive industry may hamper the automotive engine oil industry growth during the forthcoming period.
The global automotive engine oil industry is set to gain momentum from the increasing demand for lower viscosity motor oil as they are capable of enhancing the fuel economy. Many OEMs have also begun recommending these types of oils to enhance performance. The research further states that the automotive engine oil industry size was USD 36.49 billion in 2018 and is projected to reach USD 45.66 billion by 2026, exhibiting a CAGR of 2.88% during the forecast period.
Diesel Segment to Grow Significantly Backed by Cost-effective Nature
In terms of engine type, the industry is segregated into alternative fuels, petrol, and diesel. Out of these, the diesel segment procured 43.38% automotive engine oil industry share in 2018. This growth is attributable to the cost-effective nature of diesel engines, as compared to the petrol ones. Also, these are approximately 40% more efficient than the petrol engines because they possess more energy. The combustion process reduced the emission of carbon dioxide and is efficient.
Rising Number of Vehicles to Favor Growth in Asia Pacific
The industry is geographically classified into Europe, the Middle East and Africa, North America, Asia Pacific, and South America. Amongst these, Asia Pacific generated USD 12.41 billion in 2018 in terms of the industry revenue. It is considered to be one of the fastest-growing and largest regions in the industry because of the rising number of vehicles present in countries, such as Thailand, India, and China.
China and India are projected to have the maximum number of vehicles on road. India is also considered to be the largest industry for two wheelers. North America, on the other hand, would exhibit considerable growth backed by the increasing government support to promote the usage of energy-efficient oil. In Europe, the governments of various countries are implementing stringent rules to use environment-friendly oils.
Key Players Engage in Mergers & Acquisitions to Gain Competitive Edge
The industry consists of several small, medium, and large scale companies that are presently adopting the strategy of mergers and acquisitions with other reputed enterprises to enhance their product offerings and other associated services. Below are a couple of the key industry developments:
- September 2019: RelaDyne joined hands with Circle Lubricants to broaden its geographic presence in the Northeast. It would also help the company in delivering its automotive and lubricant products throughout New Jersey, New York, and its surrounding areas.
- September 2019: Saudi Aramco completed the acquisition of 50% interest of Shell Saudi Arabia Limited in the SASREF joint venture. It would help the former in upsurging the capacity and complexity of its refineries.