GLOBAL AUTOMOTIVE BASE OIL MARKET SIZE (2024 - 2030)

Global Automotive Base Oil Market is valued at USD 10.51 billion in 2023 and is projected to reach a market size of USD 12.41 billion by 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of 2.4%.

INDUSTRY OVERVIEW

Base Oil is widely used across a wide range of sectors and plays a crucial role in the formulation of lubricating oils on a worldwide scale. Marine lubricants, which are frequently used in the shipping sector to preserve and improve the performance of engines and equipment, primarily make use of Group I base oils. These base oils must have a high viscosity for high-performance marine lubricants to function at their best. One of the largest industries in the world producing base oils is the automobile industry. Although the trend toward electric cars has slowed the rise of some lubricants after sales, the demand for lubricants in the production of vehicles is anticipated to continue. Manufacturers of lubricants engage in innovative product advancements, particularly in the automobile sector, as consumers seek standard and customized goods to meet specific needs. Over the projection period, it is predicted that the demand for base oils would increase due to lubricant makers' rising usage. The manufacturing industry is being driven by developing nations throughout the world, including China, India, Indonesia, and others. The availability of raw supplies, lower costs for infrastructure, and lower labor costs all contribute to the rise. These reasons have caused base oil producers to relocate and expand their production facilities in developing countries.

COVD-19 IMPACT ON THE AUTOMOTIVE BASE OIL MARKET

Transport restrictions were put in place, which led to decreased industrial output and disrupted supply chains, which significantly slowed down market expansion as a result of the COVID-19 pandemic. The worldwide automobile industry was quickly and drastically affected by the COVID-19 epidemic. Chinese parts supplies are being halted, there are widespread industrial difficulties in Europe, and U.S. assembly factories are crumbling. This puts a lot of pressure on the car industry, which is already seeing a decline in demand globally, and it almost surely means that there will be more merger and acquisition activity. Additionally, because of social distance norms during COVID-19, manufacturing companies had a limited workforce, which hurt production and the automotive industry. Over the course of 2020 and 2021, a fall in demand for autos and commercial vehicles is anticipated. The COVID-19 pandemic has caused the production of cars in North America to stop by more than 80%. The scenario is similar in Europe and the Asia Pacific. Production has temporarily been halted by businesses including Ford, General Motors, Fiat Chrysler Automobiles, Honda, and Tesla. Even if these businesses start up again once the epidemic passes, the car sector will suffer from economic uncertainty and a drop in customer spending power.

MARKET DRIVERS: 

The demand for premium oils in the automobile sector is rising

The demand for high-grade lubricants to offer compatibility with fast-moving components and high temperatures is being driven by advanced engine technology. The final lubricants' overall performance is significantly influenced by the base oil choice. Engine oils are made up of 10–30% additives and 70–90% base oil. Thus, it is anticipated that the market for base oil would also be stimulated by the rising demand for high-grade engine oils. Diesel trucks, passenger automobiles, light-duty trucks, and stationary engines may all benefit from high-performance engine lubricants that help them resist harsh and demanding circumstances. Base oil makes up the majority of engine oils. Therefore, the base oil market is expanding due to the rising demand for high-grade oils in the automobile sector.

Lucrative market potential in the BRIC nations is driving market growth

During the projected period, lubricant markets are anticipated to be prosperous in the BRIC nations (Brazil, Russia, India, and China). Approximately 41% of the world's population, according to estimates from the World Bank, resides in the BRIC nations, and this number is projected to rise. Governments in these nations place a strong emphasis on economic growth to fulfil the needs of the enormous population. In the next five years, it is anticipated that both domestic and international investments will rise rapidly as a result of these nations' improved financial infrastructure. This would strengthen all linked industries, such as base oil and lubricants in the automotive sectors.

MARKET RESTRAINTS:

Fluctuating prices of crude oil is hampering market growth

The fluctuation in the crude oil market has a big impact on the base oil market. The crude oil market made money between 2008 and 2014 as prices rose beyond the USD 100 per barrel milestone and beyond. WTI was priced at USD 120 per barrel, while Brent crude was priced at USD 140. Crude prices reached historic lows in 2015. Such pricing fluctuation has an impact on manufacturing enterprises' profit margins.

The vast majority of base oil varieties are made from mineral oils, which are derived from crude oil. As a result, the price of crude oil has a significant impact on base oil prices. Manufacturers profit from larger margins when crude oil prices are high, while base oil suffers greatly from the price rise.

AUTOMOTIVE BASE OIL MARKET REPORT COVERAGE:

This research report on the Automotive Base Oil Market has been segmented and sub-segmented based on Type and By Region.

AUTOMOTIVE BASE OIL MARKET – BY TYPE

• Group I

• Group II

• Group III

• Group IV

• Group V 

Based on the type, the automotive base oil market is segmented into Group I, Group II, Group III, Group IV and Group V. In 2021, the Group II base oil sector held the biggest market share for base oils. During the forecast period, the Group II base oil segment is anticipated to dominate the market in terms of both value and volume. Numerous base oil industry applications, including those for gas and marine engines, trunk piston engine oils, and other uses, can make use of Group II base oil. Due to Group II base oil's superior performance and lower price when compared to other base oil (Group) categories, this market is estimated to increase.

AUTOMOTIVE BASE OIL MARKET - BY REGION

• North America

• Europe

• The Asia Pacific

• Latin America

• The Middle East

• Africa

By region, the Automotive Base Oil Market is grouped into North America, Europe, Asia Pacific, Latin America, The Middle East and Africa. The North American base oil industry is anticipated to have stable expansion over the next several years due to its highly developed industrial and automotive sectors. Due to their high preference, automotive oils will continue to dominate the North American base oil market over the course of the projection period. Following the epidemic, an increase in transportation-related activity and a relaxation of the travel restriction benefited the automobile sector and fueled vehicle sales. The need for automotive lubricants is projected to rise in light of these facts. The expansion of the Asia Pacific base oil market is being driven by the automotive industry in addition to developments in the manufacture of industrial machines. The rising rate of motorization in developing nations is driving up lubricant consumption in this industry, which will ultimately drive-up base oil demand. In addition, major producers are investing in the fast-developing end-use industries including manufacturing, logistics, car manufacturing, and others in countries like China, India, Japan, and South Korea, which is boosting demand for base oil. Between 2022 and 2030, the Asia Pacific base oil market is projected to grow at a CAGR of 3.3%, and by 2030, it is projected to be worth more than US$ 5 billion. The market value over the historical era was predicted to be close to US$ 3.5 billion in 2021. Due to the economies of countries like South Korea, China, and India growing, the market size in the Asia-Pacific region is anticipated to increase. The need for fuel-efficient automobiles is increasing, and there are more strict laws governing automotive fuel policy, which is promoting the expansion of the Europe base oil industry. For instance, the average CO2 emission level for new passenger cars must not exceed 130 grams per kilometer by the rules set forth by the European Union Automotive Fuel Policy. As a result, the market value for base oils is developing quickly due to the growing need for the creation of highly effective lubricants made from base oils. Following a CAGR of 2.5% over the course of the assessment period, Europe will likely achieve a valuation of close to US$ 16 billion, remaining a valuable market for base oil producers.

AUTOMOTIVE BASE OIL MARKET - BY COMPANIES

Some of the major players operating in the Automotive Base Oil Market include:

1. CHEVRON CORPORATION,

2. EXXON MOBIL CORPORATION

3. ROYAL DUTCH SHELL PLC.

4. ERGON INC.

5. NESTE OYJ

6. NYNAS AB,

7. S-OIL CORPORATION

8. SEPAHAN OIL

9. REPSOL S. A.

10. SINOPEC LIMITED

11. BP PLC

12. EVONIK INDUSTRIES AG

13. H&R GROUP,

14. SAUDI ARAMCO

15. SK LUBRICANTS CO. LTD.

NOTABLE HAPPENING IN THE AUTOMOTIVE BASE OIL MARKET

• EXPANSION- Throughout August 2019, ExxonMobil Chemical Company, a division of Exxon Mobil Corporation, decided to distribute its Group IV/V base stocks (synthetic base stocks) in Mexico, Central America, and the Caribbean through Synergy Additives Company S.A. de C.V. (Mexico). The change improved the company's regional presence.