Valvoliine Cummins' recent introduction of a fully synthetic lubricant—priced almost equally with mineral oil—is intended to significantly increase its uptake in India.
26 Oct 2023 | 5069 Views | By Shahkar Abidi
Sandeep Kalia, the Managing Director of Valvoline Cummins anticipates that the low single-digit market share of synthetic lubricants in India will rise dramatically over the next five years.
According to Kalia, Valvoliine Cummins' recent introduction of a fully synthetic lubricant—priced almost equally with mineral oil—is intended to significantly increase ...
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Sandeep Kalia, the Managing Director of Valvoline Cummins anticipates that the low single-digit market share of synthetic lubricants in India will rise dramatically over the next five years.
According to Kalia, Valvoliine Cummins' recent introduction of a fully synthetic lubricant—priced almost equally with mineral oil—is intended to significantly increase its uptake in India. He spoke on the sidelines of the company's 25th anniversary celebration, which was held in Mumbai on Wednesday.
A 50:50 joint venture between Valvoline Global Operations and Cummins India Ltd., Valvoline Cummins is involved in the manufacturing, distributing, and advertising of grease, lubricants, and related goods.
Synthetic lubricants, which are more common in some of the more developed automotive markets, such as US and Europe, are considered to have superior mechanical compatibility with automobile components than conventional mineral-based lubricants. However, because of its tendency to fail in specific settings and comparatively higher production costs, its acceptance has been quite gradual.
With an established capacity of about 120–140 million litres a year, Valvoline-Cummins is a manufacturer with a facility near Mumbai in Ambernath. The facility currently operates at over 80% capacity. Based on the demand trajectory, the company expects to decide on further capacity expansion plans in the next five years or so.
According to Kline’s Global Lubricants 2022: Market Analysis and Assessment report released in July, India’s lubricant market will grow at a CAGR of 3% through 2027. Among the top five major lubricants, consuming countries globally, India is the only one with strong lubricant demand growth potential. In contrast, other markets such as the United States, China, Japan, and Russia are likely to witness a
decline or slowdown in lubricant demand growth. Over the next decade, despite the emergence of electric vehicles, lubricant consumption in India will continue to grow.
At the same time, electric vehicles will create demand for specially developed fluids, called EV fluids or e-fluids.
The report added that the market value is expected to grow at an even higher CAGR of 6.0% during this period with increased consumption of high-value, low-viscosity synthetic products. Most of the original equipment manufacturers, including economic and mid-tier car makers such as Maruti Suzuki, Tata, and Hyundai, are recommending low-viscosity grades that necessitate the use of fully synthetic lubricants. Other Japanese OEMs: Honda, Toyota, and Nissan, among others, also have 0W-20 as the recommended engine oil for most of their models.
The B2B segment (commercial automotive and industrial lubricants) will witness slightly lower growth at a CAGR of 2.7% between 2022 and 2027. Even in this segment, the value is expected to grow faster (CAGR 6.9%) than volume.
Furthermore, the commercial automotive lubricants market is expected to go through a phase of transition with increased adoption of higher-quality lubricants by vehicle owners. The Vehicle Scrappage Policy, which will support the addition of new vehicles to the vehicle parcel and increase the scrappage of older vehicles beyond a specific age, will also be the driving force behind this transition. Most OEMs already recommend the use of 15W-40-grade engine oil with API CI-4 PLUS specifications for BS-IV vehicles in India.
A shift towards lower viscosity grades has also been noticed in the heavy-duty motor oil market. In India earlier, mainly European OEMs used to recommend the use of 10W-40 but now Indian OEMs also recommend their use, apart from 10W-30 viscosity-grade oil in BS-VI vehicles.