Strong auto sales to fuel lubricants demand in India
For past so many years, the engine oil segment (comprising mostly three typical types- full synthetic oil, semi-synthetic oil and mineral oil) has dominated the demand for lubricants (lubes) in India.
For past so many years, the engine oil segment (comprising mostly three typical types- full synthetic oil, semi-synthetic oil and mineral oil) has dominated the demand for lubricants (lubes) in India. The demand, however, seems to be moving increasingly toward end-users industries, particularly automotive industry, which is the largest end-user market for lubricants in India. Lubricants are normally necessary for machinery including blast furnaces, continuous castings, and others to lower downtime and boost operational effectiveness.
During the projection period, these factors will continue to fuel market expansion. Although factors such as fluctuations in crude oil prices may impede market growth. However, experts feel that in the years to come, the end-users industries will dominate the demand for the lube market. And that's not without reasons. One of the main factors promoting the expansion of the lubricants market in India is the rising demand from end-user industries. Because of their anti-wear properties, corrosion resistance, and other qualities, lubricants are utilized in construction equipment. In the steel industry, they are utilized in a variety of applications such as hydraulic fluids, compressor oils, and other substances.
With automotive being the largest end-user market for lubricants in India, light-duty vehicles including two-wheelers and passenger cars, automotive engine oils, gear oils, transmission oils, greases, and compressor oils are the most widely used lubricants in these markets. Lubricants have a good share in both the OEM and the aftermarket. The potential growth difference for the lubricants market in India between 2021 and 2026 is 809.93 thousand tonne. The increasing demand from end-user industries is notably driving the lubricants market growth in India and it will continue to do so in the days to come.
Significantly, the Indian finished lubricants market is the third largest and one of the fastest growing lubricants market in the world (The Indian lubricants market was valued at over 2,610 kiloton in 2020, and the market is projected to register a CAGR of more than 1.5 per cent during the period 2021-2026) and with the growing trade of vehicles and their spare parts, it is anticipated to grow at a CAGR of 4.77 per cent by 2027. The automotive lubricant segment constitutes a large pie of the Indian lubricant market. It is projected that the automotive industry only will see a growth at a CAGR of 3.9 per cent by 2027.
This has to be seen in the wake of the latest report by Moody's, which suggests that India is set to see the strongest growth in automotive sales in the coming years which will boost the demand for automotive lubricants. The demand for automotive lubricants has a direct correlation with on-road vehicle movement, as well as growth of vehicle population and automobile sales. Automotive sales will be further fuelled by the consumers' preference for personal vehicles over public transportation in the post pandemic world. India's automotive industry accounts for around 7.1 per cent of the country's GDP, in which the two-wheeler segment accounts for a share of around 81 per cent, owing to the growing young and middle-class population. Besides, with the consistent economic development and rising incomes, the automotive industry has been witnessing a continued shift in vehicle preferences, from two- to four-wheelers, which helps to augment the demand for passenger car motor oils (PCMO).