Market Trends of Synthetic Lubricants Industry
Rising Demand from Automotive Industry
- Synthetic lubricants are significantly used in the automotive industry owing to rising environmental regulations to reduce carbon emissions. Synthetic lubricants include water solubility, high viscosity index, and biodegradability, which makes them environmentally friendly.
- The stringent regulations on CO2 emissions from vehicles increased the demand for fuel-efficient lubricants. They are driving the market for synthetic lubricants in the automotive sector.
- According to the Organisation Internationale des Constructeurs d'Automobiles(OICA), 85.02 million vehicles were produced across the globe in 2022, witnessing a growth rate of 6% compared to 2021. It is, thereby, enhancing the demand for synthetic lubricants, which are employed for various automotive applications.
- China is the largest manufacturer of automobiles in the world. The country’s automotive sector is shaping up for product evolution. The country is focusing on manufacturing products to ensure fuel economy while minimizing emissions, owing to the growing environmental concerns.
- According to OICA, automobile production and sales in China reached 27.021 million and 26.864 million, respectively, in 2022, up 3.4% and 2.1% from the previous year.
- The United States is the second-largest automotive market in the world after China, which occupies a significant share of the global automotive vehicles market. According to OICA, in 2022, the United States automotive vehicle production reached 10.06 million compared to 9.15 million units manufactured in 2021, at a growth rate of 9%.
- All factors above will likely enhance the demand for synthetic lubricants in the automotive segment and thus will propel the growth of the market studied.
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European Region to Dominate the Market
- Europe represents the largest market for synthetic lubricants. In countries like Germany, Italy, France, etc., the demand for synthetic lubricants is increasing owing to growing industries like automotive, transportation, power generation, etc.
- The German economy is the largest in Europe and the fifth-largest in the world. Germany is one of the largest automotive markets in Europe. According to the VDA, German Association of Automotive Industry, in August 2023, a total of 266,800 units of automobiles were manufactured compared to 290,354 units in July 2023.
- Europe is also one of the leading manufacturing bases for the aircraft industry. It is home to manufacturers from different segments, such as equipment manufacturers, material and component suppliers, engine producers, and whole system integrators.
- In Europe, according to the Boeing Commercial Outlook 2022-2041, the total deliveries of new airplanes are estimated to be 8,550 units by 2041, with a market service value of USD 850 billion. The demand for synthetic lubricants is likely to rise through the years to come.
- Thus, owing to the increasing preference of OEMs for synthetic lubricants, the demand for synthetic transmission oils is expected to grow further in the near future.
- The power generation sector further boosts the market demand. Advancements in manufacturing technologies are resulting in the commencement of various new plants. It, in turn, is increasing the demand for electricity in various end-user industries.
- According to the Federal Ministry for Economic Affairs and Climate Action, Germany is at the heart of the European network. Its geographical location in the heart of Europe makes it a major player in the European power market and a hub for pan-European power flows. Germany is also increasing electricity exports to neighboring countries. Germany holds the largest power plant capacity in Europe and produces and consumes the most electricity.
- Thus, rising demand from the end-users above industries is expected to drive growth in the European region.
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