Changing Dynamics in the Indian Passenger Vehicle Market

Changing Dynamics in the Indian Passenger Vehicle Market

Nov 11, 2020

Changing consumer preferences are impacting the dynamics of the Indian passenger vehicle market and this is having a direct impact on the demand for engine lubricants.

A decade ago, the demand for diesel passenger vehicles was affected positively by the favorable price difference between diesel and gasoline fuel, as well as the greater fuel economy diesel vehicles provide. At this time, diesel vehicles accounted for over 40% of sales and passenger car diesel engine lubricant was a prominent category in the Indian passenger lubricant space.

By 2015, the Indian market was seeing the early introduction of compressed natural gas (CNG)-powered vehicles, offering benefits of lower fuel prices, higher fuel economy as well as environmentally-friendly credentials against diesel and gasoline vehicles. This era also saw rapid adoption of lighter viscosity grades for gasoline vehicles offering fuel efficiency benefits to the vehicle owner. Diesel vehicles remained popular in the SUV/Mini-SUV segment.

Today sees diesel vehicles in India being less attractive than they once were and this is expected to continue. Implementation of BS VI has necessitated diesel vehicles to be fitted with a diesel particulate filter (DPF) in order to meet the stringent limits of particulate matter (PM) along with other improvements in engine design. This has impacted the cost of vehicle which was already at a price premium compared to gasoline/CNG vehicles.

Furthermore, a reducing price gap between diesel and gasoline fuel, together with an ever-improving infrastructure of CNG stations in cities, has seen the share of gasoline and CNG vehicle sales increase, with diesel vehicles’ share halving to around 20%. (Source: Lubrizol estimates)

The mini SUV segment, which traditionally had higher percentage of diesel engines, is seeing turbocharged gasoline direct injection (TGDI) engine more commonly being used as these engines are able to maintain the right balance between power and efficiency.

However, one of the challenges for TGDI engines is the increase in fine exhaust particles which necessitates the use of gasoline particulate filters (GPFs). TGDI engines are also highly susceptible to low speed pre-ignition (LSPI); an uncontrolled combustion event that takes place in the combustion chamber prior to spark in GDI engines. This requires more advanced engine lubricants which can help address these challenges and deliver the benefits these more powerful, fuel-efficient and lower emission engines can provide.

Moving forward, Phase 2 of fuel economy mandate, which is planned to be implemented on April 1. 2022, will further drive Indian passenger engine lubricant market towards lighter viscosity higher performance engine lubricants.

So how does this all affect the oil marketer? Today approximately 70% of the retail demand for passenger car engine lubricants is satisfied by the following (Source: Lubrizol estimates):

  API Specification Viscosity Grade
Newer vehicles with TGDI engines API SP or API SN Plus SAE 0W-20 or SAE 5W-30
Port-fuel injection gasoline engines API SN or API SM SAE 0W-20, SAE 5W-30 or SAE 10W-30
Vehicles with CNG vehicles API SL SAE 20W-50

Table 1: Main requirements for Indian passenger vehicle engine lubricants

Changing market dynamics are bringing opportunities including the continued requirement for higher-performing and more fuel-efficient engine lubricants. However, such changes potentially add complexity and are ones the market needs to plan for.

Our View

Rapid changes are happening in the Indian passenger vehicle market. For the oil marketer, the opportunity exists to reduce complexity by offering a portfolio of approved lubricants, formulated from a wide choice of API Group II and III base oils, alongside a technically proven and cascadable single additive and performance polymer package.

By planning for a simple yet flexible solution, oil marketers will be able to satisfy the opportunities the dynamic Indian passenger vehicle market has to offer, as it transitions to higher-performing vehicles and engine lubricants.

For more information on the Indian passenger vehicle market, please contact your Lubrizol representative.

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