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Low viscosity passenger car motor oil (PCMO), which accounted for less than 5 percent of the total global PCMO demand in 2014, is projected to increase to more than 7 percent by 2023, according to a recently released report from Kline.
The continuing global migration to lower viscosity grade motor oil is expected to result in higher penetration of synthetics and semi-synthetics, as well as higher revenues, longer oil drain intervals and suppressed overall PCMO growth.
The increasing demand for lower viscosity motor oil is driven by its ability to improve fuel economy along with original equipment manufacturers (OEMs) recommending these oils to maximize performance and converting their factory and service fill requirements to these low viscosity grade products. In the past, 0Ws would only be found in high-performance sports cars and ultra-luxury vehicles. Today, a base model Toyota Corolla leaves the factory with 0W-20 in its crankcase.
In addition, the GF-6 product specification upgrade planned for 2017-2018 is expected to create the technical demand for these lower viscosity grade products.
Given the nature of 0Ws and the formulation requirements, these products fall into the full synthetic category and offer lubricant suppliers, distributors, installed service providers and retailers better revenue opportunities as compared to conventional motor oils. Conversely, synthetic motor oil enables extended oil drain intervals, which, depending on the OEM, driving patterns and operating conditions, can be anywhere from one oil change every six to 12 months to upward of one every 18 to 24 months.
"As government and OEM recommendations become universal, the shift toward 0Ws and low viscosity grade products will persist," notes George Morvey, industry manager for Kline's energy practice. "Furthermore, as engine and bolt-on hardware technologies such as turbochargers and gasoline direct injection evolve to reduce emissions and improve fuel economy, the shift will also play a role in driving demand for synthetic lubricants."
In 2013, there were more than 70 million new, privately owned vehicles purchased globally, and this number is expected to rise at a rate of 3 percent annually until 2023.
"The development of the synthetic market comes from different fronts," explains Morvey. "In the automotive industry, for example, OEMs had different specifications for different countries. Now, OEMs are converging to global platforms with global specifications. What we now see is that the type of oil you put in the car that is built in the United States will be the same type of oil, regardless of where you purchased the vehicle."
The coming ubiquitous presence of synthetics should allow for brands and marketers to focus on maintaining a simple synthetic product portfolio that can be used across global markets.
For more information, visit www.KlineGroup.com.