Automotive

Throughout my career, I have seen firsthand how lubricants have improved. I’ve witnessed how products are safely manufactured and have learned about the product life cycle. The period from the first time I even heard about an oil drain, to witnessing the long oil drain intervals we see today has been an incredible journey—from a 2,000-mile break-in drain for my dad’s Oldsmobile, to the more common 10,000-mile drain allowed for most vehicles on the road today. 

We no longer accept an automatic 3,000-mile oil drain or routinely do a spring and fall oil change. Most do at least an annual oil change, although today’s oil still protects if they should forget to provide some short-term insurance. Today’s lubricants allow for better fuel efficiency, lower emissions and easier starting in the winter. 

Since the first day I started to formulate lubricants, improvements were driven by environmental regulations, and pumpability was crucial, along with sludge and wear protection. But industry has always been driven by sustainability, protecting the engine to ensure its long life and minimizing emissions. We just didn’t use sustainability as the buzzword it is today. I formulated my first truly sustainable oil in 1992 with the first (as far as I know) rerefined oil qualified as ILSAC GF-1. I have no doubts that we are not even close to the end of the story, as lubricants for engines and other equipment will be around for the foreseeable future.

That said, industry is hitting a crossroads, as lubricants have improved to the point that consumers can use products longer, and industry growth is declining. Demand is already shrinking in the major North American and European markets for engine oils, and growth has slowed significantly in the rest of the world.  Many see the advancement of battery electric vehicles (BEVs) as the major threat. There is no question that BEVs are cutting into demand, but their impact on the world fleet is relatively small today. No doubt, BEV impact will only get greater as their share of new sales grows and they become a significant part of the global car parc. 

Up to today, the growth of oil drain intervals has had the most significant impact on demand for both passenger car and heavy-duty engine oils. Oil drain intervals have grown substantially over time, and it’s the quality of the lubricant as well as improved engine technology that has allowed this to occur. One can look at many items when it comes to lubricant demand—including passenger car diesels versus gasoline engines, sump sizes, growth of the car parc per capita and of course BEV market penetration—but it is oil drain intervals that have had the largest effect to date.

So how did we get here, and what has enabled these improvements?  The answer is simple: better hardware, better additives and, even more importantly, a huge evolution in the lubricant base stocks that represent about 80% of an engine oil’s formulation and have enabled the use of lower-viscosity engine oils and transmission fluids.

Back in the 1980s, multigrades began taking hold, and SAE 10W-40 was the leading viscosity grade. Monogrades were still a major part of the market, but the 1990s brought changes to the base stocks that were used to formulate engine oils.  New Group II base stock volumes grew and enabled OEMs to begin to recommend SAE 5W-30. SAE 10W-30 displaced 10W-40, and both grades began to grow, slowly replacing Group I base stocks. 

These stocks enabled additive suppliers to design new products that improved fuel efficiency and lowered emissions. Charles Baker, formerly of ExxxonMobil, has been on the front lines concerning the evolutionary changes to base stocks, from designing Exxon’s grade slates to building new plants. Charles also served as chair of API’s Base Oil Interchange/Viscosity Grade Read Across for many years until his retirement from ExxonMobil. He commented: “Base stocks have provided the industry huge flexibility in the design of lubricants, enabling lower viscosity without degrading volatility, significantly enhancing oxidation control and providing much better low-temperature performance. Without these base stocks, additive companies could not have formulated these lower-viscosity products. In addition, new capacity was added in sufficient scale to give industry and specifically OEMs the confidence it could meet commercial needs.”

As a former formulator, I can attest that the newer stocks allowed additive companies to further enhance protection with even more oxidation control. They were also able to employ dispersants to enhance soot control (especially for diesels) and other additives to ensure a clean engine over an extended oil drain while still providing outstanding wear protection. 

Baker added, “The improvements did not stop with Group II. Group III base stocks began increasing in supply starting in the late 1990s and continue to grow today, along with Group II, which continues to be the primary base stock used in both passenger car and heavy-duty engine oils, as Group I continues to decline.”  

Until the last decade, lubricants have continued to grow, with Asia and developing nations providing significant opportunity for growth for both the additive and base stock industries. Additive companies also cashed in on higher treat rates of additives as quality levels continued to improve. 

But as time moves forward, so does technology. OEM hardware improved, and they cautiously took advantage of the longer drain capability. Then the pandemic happened, which I believe changed consumers’ perception about oil changes, and they became more comfortable with extended service intervals. The pandemic also made working from home very common for a large portion of the population, driving down miles driven and trips to service one’s vehicle.  These factors, combined with oil life monitors, which tell the consumer when to change the oil, have all had impact. Additive treat rates have stabilized or have been reduced in some cases with evolutionary changes and improvements. Finally, any growth in the car parc was going toward electric vehicles, which do not require engine oil and will only further impact demand in the future.

Still, one must remember that change is slow, and it took a long time to get where we are. The car parc changes very slowly, and cars built today will still be on the road for the next 20-25 years, as the average age of vehicles continues to grow around the world.  We also must consider that car ownership per capita is not growing as much in the developed world, although it is still growing rapidly in Asia and the developing world. But EV adoption will greatly impact the car parc and reduce growth potential for lubricants, especially in China and India, where there is so much growth potential. 

So while lubricants are required, global demand will grow slowly overall, with growth in Asia offsetting declines in North America and Europe in the more immediate future. We also need to consider that heavy-duty engine oils also continue to see much longer drain intervals due to the ever-increasing quality of the engine oil but to date have been less impacted by the growth in electric drive trains.

Rick Finn, former Infineum business manager and director of corporate strategy noted that “demand for lubricants will continue for many decades but will shift regionally, by application and through growth of lubricants into new applications. These shifts will impact both base stocks and additives. Engine oils, which represent roughly 50% of volume, will peak then decline, led by passenger car engine oils. And there are no obvious demand replacements at scale, at least for the additive companies. Base stock producers may find material new applications, such as immersion cooling, but that’s unlikely to offset declines in engine oil.” 

He continued: “Talented marketers will continue to thrive and find ways to differentiate as the markets evolve. But as we saw in the 1980s and 1990s, the number of additive companies and lube marketers will likely shrink through industry consolidation, at least among the existing players. We just do not know exactly who or when.”

This is an industry that I have been proud to work for, and I have seen many changes over the course of my career and will continue to support talented colleagues for years to come. Lubricants are not going away, but they are technically very robust. As time passes, average oil drains will continue to increase, and EVs will continue to penetrate the automotive market. Because of this, demand will peak and eventually decline. 

Baker noted that “base stocks will also continue to improve, with higher VI, lower volatility and even more options for formulators and OEMs to continue to make even better lubricants.” 

Some lubricants, such as driveline fluids, are now fill-for-life or capable of longer life, and we are seeing significant ODI increases in heavy-duty engine oils. Both PCMO and HDD oil drains will eventually plateau, and we hope most car owners will follow OEM recommendations for at least annual oil changes, no matter what the oil mileage is. Lubricants are relatively inexpensive compared to the cost of the hardware they protect, and optimizing the drain ensures the best fuel economy and lowest emissions. They serve as great insurance if you want your vehicle to last a long, long time!   

Steve Haffner is president of SGH Consulting LLC. He has over 40 years of experience in the chemical industry, primarily with Exxon Chemicals Paramins and Infineum USA. Contact him at sghaffn2015@gmail.com or 908-672-8012.