The North American lubricants market encompasses a wide range of oils and fluids used in the consumer automotive, commercial automotive, and industrial market segments. The United States dominates the region by a large stretch, distantly followed by Canada, accounting for 9% of the lubricant sales volume and Mexico with an 8% share.
This is second only to the Asia-Pacific market, which is moving towards synthetics and other low viscosity grade lubricants as the vehicle parc expansion in the region creates such demand. Passenger car motor oil (PCMO) is the leading product category in North America, accounting for over 25% of the total lubricants market. Process oil and heavy-duty motor oil (HDMO) follow with 17% and 16% shares, respectively, in 2014. Recommendations from original equipment manufacturers (OEMs) and consumers extending oil drain intervals enable a greater use of synthetics.
Total consumption of automotive and industrial lubricants in North America in 2014 is estimated at over 2 billion gallons in a market valued at a projected $28 billion.
Industrial oils and fluids are the leading market segment in North America; however, the consumer automotive lubricants segment accounts for a nearly 30% of the total volume, followed by commercial automotive lubricants at 25% of the total volume. In terms of viscosity grades, SAE 15W-40 continues as the leading HDMO grade, and 5W-30 remains the leading PCMO grade in North America in 2014. Most notable is the growth in HDMO demand for 10W-30 due to the growing demand for lighter grades that assist in improving a vehicle’s fuel-economy. Additionally, this growth is supported by supplier push and some large-scale end user changes in their usage patterns. As a result, in 2014, 10W-30 demand increased about 1% since 2011.
In the consumer automotive segment, there has been significant growth in demand for lighter viscosity grades, such as 5Ws and 0Ws, since 2011. Based on the latest new vehicle production and sales forecasts, Kline estimates that 0Ws will account for over 10% of total North American PCMO demand in 10 years. The passenger car market in the United States is the second largest in the world. Due to this large volume of as well as vehicle parc modernization, synthetics and semi-synthetics account for roughly one quarter of the market. The growth potential for synthetics is promising in the future, but there are some caveats as well.
The double-edged sword in this scenario is that value will rise with every gallon of synthetic PCMO consumed at the factory and service fill level, while overall demand will be suppressed, despite an increase in drivers such as amplified new vehicle production and sales. This will happen because OEMs and consumers will continue to extend oil drain intervals to as little as one per year under normal driving conditions to reduce maintenance costs. Nonetheless, synthetics hold the cards across all finished lubricant markets in North America, and the shift in the paradigm will only be exacerbated by infrastructural and socioeconomic trends.
These findings can be found in the soon-to-be-published Opportunities in Lubricants: North American Market Analysis Volume I: Commercial Automotive report and the Volume II: Consumer Automotive report set to be published in 2016. The report series provides subscribers with an accurate and independent appraisal of the North American finished lubricants market in terms of its size and segmentation, key end-use segments and trends, supplier positions, business opportunities, and competitive forces.