Engine oil marketing is growing in terms of consumption. During the last 5 years, consumption has increased notably, driven by the increasing number of automotive vehicles as well as with the growing applications and industry chain structure.
So far all we are engaged to the engine oil trade is stating that the market is growing. Yes, this market is growing in terms of consumption.
But as a market observer, I would like to argue with this statement you all in some extends.
Before that, let’s talk a brief about the possible market size.
On an assumption, last year, the demand for the total engine oil was around 160,000 tonnes. It has claimed that market growth is nearly 15% during the last three years. Overall consumption the engine oil rose over 14% during this period.
It has observed that engine oil consumption has increased by 60% since 2009, where the market has enjoyed around 5% to 6% annual growth. Market Insiders says the engine oil consumption likely to be around 165,000 tonnes for the year 2019.
The retail market was about Tk 1,000 crore in 2009, when the automotive sector consumed 77%, and the manufacturing sector consumed the rest market share. But now, based on the growth analysis, the expected retail market is around Tk 3,000 crore.
During the last 5 years, engine oil consumption has increased notably, driven by the increasing number of automotive vehicles as well as with the growing applications and industry chain structure. It has noted, the automotive sector directly consumes around 70% of the total demand engine oil.
Few consultancy firms have already published few forecast reports on this market. Their forecasts say this market is expected to register a CAGR of approximately 2.80% during the forecast period, 2019-2024.
Why the demand for engine oil is rising? It is because of the rapid growth in the sales of automotive vehicles in the country.
Light motor vehicles and passenger cars are the fastest-growing sectors, and they are also the largest consumer of engine oil in Bangladesh.
The sales of the automotive vehicle have increased rapidly throughout 2013-2017 and are expected to increase throughout 2019-2024.
In 2017, according to the Bangladesh Road Transport Authority (BRTA), a total of 0.5 million vehicles were registered in Bangladesh.
The sales of new passenger vehicles witnessed an increase of nearly 30% in 2016-17 (according to the International Organization of Motor Vehicle Manufacturers), and the growth is expected to continue further.
The per capita income of the citizens of Bangladesh is increasing steadily, in turn, leading to a rise in the living standards of the people, and thus, the demand for the automobiles is increasing.
Also, the sales of high-end cars have witnessed a massive surge in the country lately, with a growth rate of over 15% being recorded during 2015-18.
This, in turn, has spurred the consumption of semi-synthetic and synthetic engine oils in the country in recent times.
These types of data-driven analysis may help you to verify the market growth, my opinion is on the overall growth of the market.
Most of the users remain in confusion questioning the quality of the existing engine oils in our country.
Reality is that we are going backwards, whereas the global market is shifting to high-quality engine oils to meet the requirement of modern vehicles..
The government liberalized the market and banned non-additive lubricants in 2001, to ensure minimum standards which is SC/CC.
Nearly 45% of the engine oil product is substandard in terms of quality. These are being produced from the recycled base oil, low-quality base oil, or sometimes from the straight mineral base oil without mixing any additives.
Few manufacturers are blending non-standard engine oil by base oil with a recycled base oil, which damages equipment worth million USD every year.
So the low-quality engine oil remains a big concern.
No doubt, there are so many reputed engine oil brands in our country those are always in the customer’s choice. But it is a matter of regret that, the reputed branded products are in the trap of being recycled.
There are many examples of making the duplicate product of the highly sold product like Mobil Super 4T, Castrol Active 4T, Havoline 4T Super, BP Visco 3000, BP Super V, Motul 300V 4T and many more.
The sale of recycled engine oils, especially by the names of popular brands, continues with the authorities taking no steps to check the unscrupulous business by a section of oil traders.
Sources said that engine oils are adulterated in two ways. Mostly, unscrupulous traders mix paraffine with recycled oils collected from the marine and various manufacturing industries. In the absence of paraffine, they use kerosene oil to adulterate the engine oils.
Only for the demand of the engine oil at a low price, these least quality lubricants have been swayed by the market.
Many drivers of buses, trucks, and motorbikes complained about engine trouble after using sub-standard products from unreliable sources.
Abdul Mazid, in-charge of a filling station at Baghabarighat in Shahzadpur union of Sirajganj district, said the drivers are more willing to use lower-priced engine oil. Because of huge demand, we are more willing to sell those less priced engine oil.
No administration is solely responsible for controlling this adulteration rather than a few raids by the special mobile court. There are no visible activities of any institutions in checking the malpractice.
Bangladesh Petroleum Corporation (BPC) is aware of this illicit practice but they are yet to permanently stop the trade of impure engine oil sold throughout the nations.
The contrast between two discussions, one is the market size in terms of demand and the trade of least quality engine oil, will lead you to unyielding status.
We have to understand that, a market with growing demand is not growth at all. Rather, it is more important to ensure a market with proper value chain, where users have proper knowledge of quality engine oil and where the trade ensure the minimum standard.