Foreign marketers of motor oils lost their competitive edge in Russia to domestic players in 2016, primarily because of the countrys recession and steep ruble devaluation the past few years, according to market research conducted by Moscow-based RPI consultancy.
The study, Automotive Motor Oil Market: Current State, Outlook for 2025, Key Players and Sale Channels, found that the companies such as ExxonMobil, BP and Total – which havent set up lubricant production in Russia and import finished product – are all facing difficulties.
From 2014 to 2016, these companies have been seriously struck by lost market share in the passenger car and commercial vehicle engine oil market segments, the Moscow-based consultancy told Lube Report in an e-mailed interview. In 2016, Mobil-branded motor oil sales in Russia reached 12,000 tons, a 10 percent drop over the year before. Last year, Total sold 9,000 tons of motor oils in Russia, a 12 percent drop compared to 2015.
RPI found that the main suppliers of finished lubricants in the country are Lukoil, Rosneft and Gazprom Neft. In recent years, they sort of monopolized the market and … jointly held 55 percent of Russian finished lubricant sales in 2016, the consultancy said.
Russias total lubricant consumption slipped to 1.6 million tons in 2016, a 1.8 percent drop from the year before. Consumption slumped steeper in 2015, about 5 percent from 2014. The consultancy said the 2015-2016 slump was caused by low industrial output and reduced commercial transportation, but it predicted a gradual recovery of demand. RPI expects lubricant consumption in the country to grow by a 6.2 percent compound annual growth rate out to 2020, reaching almost 1.7 million tons.
The consultancy predicts the nations passenger car motor oil consumption will grow by almost 15 percent over the next eight years, reaching 620,000 tons in 2025. This should be caused by the car sales growth in Russia that will trigger higher synthetic motor oil demand. The peak passenger car motor oil demand of the years 2011 and 2012 is expected to return in 2021. Also, we expect an average decline of [conventional] and semi-synthetic passenger car motor oil consumption of 6.6 percent annually, related to increased car scrappage and replenishment of the vehicle fleet in the years to come.
RPI also found that the passenger car segment could show the greatest potential in motor oil segment through 2025, with demand rising about 3 percent annually, while heavy-duty motor oil consumption will grow just 1 percent per year.
Russias Central, Volga and Siberian federal districts held 60 percent of the nations motor oil consumption in 2016, or almost 995,000 tons, according to the study. The Far East federal district held the largest per capita consumption in 2016, reaching 6 tons per 1,000 population. Large amounts of registered vehicles in this district that are used in the other parts of the country explains this phenomenon. Otherwise, in the rest of Russias federal districts the per-capita consumption is around 3.5 tons of motor oil per 1,000 population.
A key market trend is the change in motor oil sale channels in Russia, according to the study. Customers increasingly use authorized dealership service stations or technical maintenance shops for oil changes instead of do-it-for-me private garages.
For more information about the RPI study, available in Russian only, click here.