Most of this growth is expected in developing nations throughout Asia, Latin America, and Africa where poor infrastructure, demographics, and economic realities mandate two-wheelers as indispensable means of transportation. Although sales volumes are forecast to remain flat in North America and Europe, both of these mature markets will see higher premium product demand.
The Asia region encompasses seven of the top 10 two-wheeler markets, with China alone accounting for 41% of global two-wheeler production. However, reflecting both a growing affluence and the result of legislation curbing city use, China’s two-wheeler sales are slowing down, contrasting with rising sales in India and Indonesia. Overall, the Asia-Pacific region is the largest motor cycle oil (MCO) market claiming approximately 76% of the global market, followed distantly by South America, Europe, and North America, respectively.
Kline’s Energy Practice analyst, Gabriel Tarle, notes, “Despite the trends of extended drain intervals and the continuing sharp decline of the two-stroke vehicle population leading to an uptake in four-stroke vehicles, global MCO consumption is projected to grow at just over 6% per year over the next five years. The strongest growth is expected in Asia and South America where two-wheelers are successfully penetrating rural and semi-urban areas and the usage of two-wheelers as taxis and for goods transportation has increased.”
Engine oils account for over 95% of the total MCO market, with the balance consisting of products including fork oils, rear suspension oils, greases, and chain oils. Globally, the top 10 suppliers, claiming 48% of the two-wheeler lubricants market, include Castrol, Shell, Idemitsu, Pertamina, Chevron, and Total.
While Europe claims only 4% of the global MCO market, it is a highly varied market where, challenged by Euro zone austerity, many suppliers are struggling to maintain their market share and successfully promote brand loyalty. In contrast to Northern Europe where two-wheelers tend to be used recreationally, in the Southern European market, they are primarily used for transportation. This consequently growing MCO segment deemed the “high-street” market emergence.
Tarle elaborates, “This channel consists of corner or part-time owner-mechanics running their own independent service garages. It’s called ‘high street’ because the initial lubricant purchase is made through the retail segment, either from mass merchandisers or from auto part stores. The ability to provide two-wheeler maintenance and repair services at significantly lower labor costs than franchised dealerships is the major reason for the growth of this segment.”
While the mature European and North American MCO markets do not show dramatic growth in terms of volume, they are expanding in terms of value. The market penetration of synthetic lubricant products is exceptionally high in Europe. Semi-synthetics dominate with just under 50% of the market followed by full synthetics, while conventional/mineral products are the smallest segment of the market. Viscosity grades 10W-30 and 10W-40 are highest growing viscosity grades globally due to OEM recommendations in their favor.
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