The Indian Lubricant Market: Survival of the Slickest
The Indian Lubricant Market: Survival of the Slickest
Introduction
The Indian automotive lubricant market is the sixth largest market in the world with revenues of approximately $1.30 billion in 2002. It is also one of the fastest growing retail markets in India. Until 1993, it was a highly regulated market with a clear dominance of the public sector. Companies like Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Indian Oil Corporation (IOC) held more than 75 percent of the market share. In recent years, with the advent of the increasing number of multinationals in the Indian market there is a growing presence of private companies. Companies like Castrol, Elf Total-Fina, Gulf, and Shell Oil have made their presence felt in the market.
Market Size
Total production of automotive lubricants in India is approximately 8 to 10 percent of global lube production. Unlike other countries where lubricant demand has witnessed stagnation, the Indian market has been growing at approximately 7 percent per annum for the past 2 years. The public sector contributes to over 60 percent of the revenues for this market. MNC’s have 5 percent market share and the remaining share is held by the unorganized sector. Automotive lubricants are further divided into diesel lubes and petrol lubes. Diesel lubes comprise 70 percent of the market and petrol based lubricants cover the rest. As diesel lubes are used by commercial vehicles, which have to cover greater distances, their market share is higher. Engine oil constitutes around 83 percent of total sales volumes. Gear oils, transmission fluids, hydraulic brake fluids, and engine coolants contribute to the balance.
Competitive Analysis
The first seeds of competition were sown in the early 1990’s when following the liberalization of the Indian economy, the government decided to open the Indian market to foreign competition. Import of base oil, the key raw material, was de-canalized with IOC losing its status as the
Introduction
The Indian automotive lubricant market is the sixth largest market in the world with revenues of approximately $1.30 billion in 2002. It is also one of the fastest growing retail markets in India. Until 1993, it was a highly regulated market with a clear dominance of the public sector. Companies like Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL), and Indian Oil Corporation (IOC) held more than 75 percent of the market share. In recent years, with the advent of the increasing number of multinationals in the Indian market there is a growing presence of private companies. Companies like Castrol, Elf Total-Fina, Gulf, and Shell Oil have made their presence felt in the market.
Market Size
Total production of automotive lubricants in India is approximately 8 to 10 percent of global lube production. Unlike other countries where lubricant demand has witnessed stagnation, the Indian market has been growing at approximately 7 percent per annum for the past 2 years. The public sector contributes to over 60 percent of the revenues for this market. MNC’s have 5 percent market share and the remaining share is held by the unorganized sector. Automotive lubricants are further divided into diesel lubes and petrol lubes. Diesel lubes comprise 70 percent of the market and petrol based lubricants cover the rest. As diesel lubes are used by commercial vehicles, which have to cover greater distances, their market share is higher. Engine oil constitutes around 83 percent of total sales volumes. Gear oils, transmission fluids, hydraulic brake fluids, and engine coolants contribute to the balance.
Competitive Analysis
The first seeds of competition were sown in the early 1990’s when following the liberalization of the Indian economy, the government decided to open the Indian market to foreign competition. Import of base oil, the key raw material, was de-canalized with IOC losing its status as the