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Are Car Owners Concerned About Motor Oil?

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Bangladesh Automotive Oil Market
Bangladesh Passenger Car Motor Oil Market

Are the car owners concerned with the quality lubricant oil? A general view would say yes, it should be! However, this belief varies from one user to another user.

The most passenger car owner is agreed to use quality engine oils for their cars; as they don’t want to compromise with their engines. However, most of them don’t have the proper knowledge of the appropriate oil grades.

We conducted a random research on 200 passenger car owners of Dhaka city to understand the view of using lubricating oil.

Surprisingly, findings say that 77 per cent of passenger car owners doesn’t know the purpose of using automotive oil.

79 per cent car owners rely on their drivers for the vehicle maintenance and oil change. They don’t have ample time to maintain this responsibility.

About 92 per cent doesn’t have the knowledge of SAE grade of the automotive oils. They think branded products are good for the engine.

Around 79 per cent car owners recognize the passenger car engine oil as a Mobil oil while conducting the survey.

Finding also reveals that the expense for quality oil is not a fact for them, rather the quality of the oil is the matter; however, most of them are not properly aware of an oil change.

Most importantly, we found about 12 per cent of car owners purchase the passenger car engine oil personally for their cars.

Consequently, it has found that the car owners are not aware of lubricants oil features. However, they don’t want to take any risk happening to their car engines using poor graded engine oil.

Bangladesh Passenger Car Motor Oil Market: Outlook 2020

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Bangladesh Passenger Car Motor Oil Market
Bangladesh Passenger Car Motor Oil Market

The passenger car motor oil market of Bangladesh: Outlook 2020 is eyeing mostly on the modified hybrid cars, ride-sharing services, and the impact of these factors on PCMO demand.

This market also evaluates the passenger vehicle population by vehicle size, fuel consumed, vehicle age, leading OEMs, and trends in passenger vehicle production, sales, and population growth, as well as PCMO demand overall and by SAE viscosity grades, formulation types, and channels.

This year, the government has allowed the import of second-hand hybrid cars as well as slashed the supplementary duty ranges from 5 per cent to 45 per cent.

Consequently, the sales of the used hybrid cars are surging for better fuel economy and comparatively lower prices than the brand new ones.

Market Insiders says hybrid cars account for 10 per cent of the total reconditioned cars brought into the country in the first half of the fiscal year.

Besides, the ride-sharing industry has made up only 23 per cent of the transport sector and has barely made a dent in the larger picture of the larger overall transport industry.

Uber, Pathao, and other ride-sharing apps are now middle-class urban solutions to a problem that affects the masses. The emergence of the ride-sharing companies has already initiated a mobility revolution, impacting PCMO demand due to more frequent oil drain intervals in the near term.

So, the passenger car motor oil (PCMO) market is on the cusp of significant change triggered by forces shaping the future of mobility. These future prospects will evaluate how and when PCMO demand will change as a reaction to the emerging modified hybrid cars, including the advent of ride-sharing.

In the medium term, the impact is more difficult to model; however, opportunities for partnerships to market PCMO and other lubricant products or use it as a new channel to market are among the positive factors.

Do the current marketing messages of PCMO suppliers resonate with this group of buyers, decision makers, and influencers, or do they need to be modified for this new and growing segment of the market?

Mono-grade Lubricants Market of Bangladesh

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Zulker Naeen
Mono-grade Lubricants Market of Bangladesh

The mono-grade lubricants still hold the lion’s share of Bangladesh market. The agriculture-based economy and the current industry standard kept this mono-grade market a regular one.

Since 2001, the minimum API standard was set at SC/CC to ensure a minimum standard for this industry. Then, from 2002 to 2011, the blending plants under the private oil companies have brought a major shift in this lubricants market.

According to the Bangladesh Lube Blenders Association, the annual demand for lubricants oil is about 160 million litters now. Besides, under the public and private sector, the production capacity of 18 lubricants blending plants is about 200 million litres.

However, the alarming matter is that many local brands are trying to market their products by their name deploying the toll blenders, which has identified as the forthcoming peril for the existing lubricants brands.

The blending facility has created a market for an open barrel-based monograde product which has liberalized an uneven practice.

Many unscrupulous businessmen are involved in the recycled barrel oil business in this market causes to the availability of the lower-standard barrel products.

Above all, most users are not aware of the good lubricants oil products, still which is the key barrier for the upcoming brands.

However, more entrants will enter in this monograde oil market to make this market more competitive. Truly, it is challenging for those to play with this market, even to establish in the lubricants space.

Is Ride-Sharing Sector Driving Next MCO of Bangladesh?

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Ride-Sharing Sector of Bangladesh
Is Ride-Sharing Sector Driving Next MCO of Bangladesh?

The ride-sharing sector of Bangladesh has found as an initial success in terms of solving traffic woes; however, the ride-sharing apps are middle-class urban solutions to a problem that affects the masses.

So far, the ride-sharing policy can be observed as a tech-oriented business venture, a transformative one to our transportation system.

The popularity of Pathao has already increased the two-wheeled traffic in Dhaka. Especially, the motorcycle population focused on ride-sharing has increased a 44 per cent uptake in the sale of motorbikes. So, the local ride-sharing industry is turning out to be decidedly two-wheeled in nature.

In fact, the ride-sharing industry in Bangladesh is worth an estimated Tk 2,200 crore, yearly. Even then, it makes up only 23 per cent of the transport sector and has barely made a dent in the larger picture of the larger overall transport industry.

So it is clear that the motorcycle oil (MCO) market is on the cusp of significant change triggered by forces shaping the future of mobility.

Market Insiders forecasted that how and when MCO demand will change as a reaction to transformative venture redefining mobility, including the advent of ride sharing.

The emergence of ride-sharing companies like Pathao has already initiated a mobility revolution, impacting MCO demand due to more frequent oil drain intervals in the near term.

In the medium term, the impact is more difficult to model; however, opportunities for partnerships to market MCO and other lubricant products or use it as a new channel to market are among the positive factors.

In the ride-sharing model, major MCO brands need to look to the future, as questions such as who will be making the decision on the ‘brand’ of MCO at the time of an oil change will be raised.

Do the current marketing messages of MCO suppliers resonate with this group of buyers, decision makers, and influencers, or do they need to be modified for this new and growing segment of the market?

However, the motorcycle oil market of Bangladesh is looking at the ride-sharing services, and the impact of these factors on MCO demand.

Motorcycle Lubricants Market in Bangladesh

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Ride-Sharing Sector of Bangladesh
Motorcycle Lubricants Market in Bangladesh

The motorcycle population in Bangladesh is estimated to grow 17 times faster than the corresponding figures for passenger cars within the next 5 years, driven mainly by its rising demand.

Now more than 1,000 motorcycles are sold daily, which was just half of the daily sales five years ago, according to data collected from industry insiders.

Operators now predict that the market would grow many folds in the next two-three years mostly because of the favourable policy and tariff structure that encourages assembling, leading to eventual manufacturing.

The cabinet already has given the nod to Motorcycle Industry Development Policy 2018 to facilitate the motorcycle manufacturing process to meet the domestic demand for low-cost modes of transport as well as to expand the export basket.

The policy has targeted to locally manufacture 5 lakh motorcycles a year by 2021 and double the number by 2027.

The increasing biker rate in Bangladesh has formed the bedrock for 4T lubricants in the motorcycles segment (“MCO”). By 2020, the MCO market is projected to reach 400– 450 million litres per year, will turn into a dominant market.

The distribution structure of MCO in Bangladesh traditionally covers the following channels: primary and secondary distributors, servicing workshops, automotive retail shops, and localized retail shops.

Due to the need to serve a large market base across diverse geographical landscapes, end-users typically purchase their lubricants from servicing workshops—followed by the automotive/ localized retail shops.

Competitive Landscape in Bangladesh Lubricants Market

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Bangladesh Lubricants Oil Market
Competitive Landscape in Bangladesh Lubricants Market

The competitive landscape of lubricants in Bangladesh is a vibrant one. Already, lubricant players have established their footholds here, with international brands.

Among them, Mobil is the most established brand, with a strong presence in the lubricants shelves. Other major players are BP, Total, Castrol, Shell, and Caltex.

Compared to these market players, the market shares of the other international, national and local brands are most expansive in this market.

It is already flooded with many international and national brands.

Market insiders say that around 70 per cent market shares belong to various national and international brands altogether.

The number of running brands is about 100 altogether and the number is increasing day by day.

Market leaders are enjoying their market share is not true at all.

However, many local and international brands have a strong presence, and it remains to be seen if the national brands can raise their competitiveness against international brands.

In terms of the lubricant products landscape, Bangladesh is still predominantly consuming mineral-based, low-grade lubricants compared to the more lucrative synthetic based European and North American markets.

However, the consumption trend in Bangladesh has begun to gradually shift towards semi-synthetic/synthetic lubricants over the past decade.

The national brands will need to have a clear and effective product positioning strategy in order to increase shares in the growing upgrades market that is presently led by international brands.

Automotive Lubricants in Bangladesh: Passenger Cars Segment

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Lubricants Oil
Automotive Lubricants in Bangladesh: Passenger Cars Segment

In the past decade, Bangladesh has become the undisputed growth region for reconditioned cars. Around 65 cars are sold in Bangladesh on an average now.

Currently, the market size for reconditioned cars is around Tk 5,000 cr. Each year the size of the market is increasing by 15 to 20%.

During July 2017 to December 2017, Bangladesh imported around 11,476 cars to fulfil the growing public demand.

Furthermore, the increasing motorization rate in Bangladesh, fueled by rising average household incomes over the years, has formed the bedrock for automotive lubricants in the passenger cars segment (“PCMO”).

The distribution structure of PCMO in Bangladesh traditionally covers the following channels: primary and secondary distributors, servicing workshops, gas stations, automotive retail shops, and localized retail shops.

Due to the need to serve a large market base across diverse geographical landscapes, end-users typically purchase their lubricants from servicing workshops—many of which are operated by small businesses—followed by petrol stations and localized retail shops.

Industrial Lubricants Market in Bangladesh

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Lubricants Oil Market
Industrial Lubricants Market in Bangladesh

In Bangladesh, the industrial lubricants market has become a focus market in recent years as players look outside of the highly competitive automotive lubricants market for new growth.

Within Bangladesh, industrial lubricants represent the third-largest market after mineral-based lubricants markets and automotive lubricants market, with an estimated annual consumption of around 20 million litres in 2018 that is projected to reach the 25 million litres mark by 2020.

Bangladesh’s rising demand for industrial lubricants does not come as a surprise. The stability of Bangladesh’s economy in the last 5 years and, coupled with its pro-business climate and improving infrastructure has transformed this market into one of the top destinations for foreign direct investments in the manufacturing sector.

Lubricants consumption by the industrial sector has increased significantly in the last 5 years. This industrial sector accounts for around 30% of the total lubricant consumption in Bangladesh.

The demand from the industrial machinery and equipment application also accounts for a major share of the total lubricants market and is driven by the end-user sectors such as power, manufacturing, logistics, automotive manufacturing, and others.

In Bangladesh, the distribution structure of industrial lubricants has evolved over the years to serve the dispersed industrial landscape.

Traditionally, lubricants oil manufacturers have relied on primary and secondary distributors as their primary channel-to-market.

However, some markets may even require traders–individuals who have intimate knowledge of the market–to service the population of small-scale industrial end-users and retailers in rural regions.

Understanding Bangladesh Lubricants Oil Market

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Bangladesh Lubricants Oil Market
Understanding Bangladesh Lubricants Oil Market

In Bangladesh, the annual demand for lubricating oils is increasing significantly, it’s around 100 million litres, whereas base oil demand around 140 million litres including process oil.

The market value of base oil is around $133 million.

The annual consumption of lubricants oil has got almost 3% yearly growths.

This market growth is in the eye of many investors and business analysts, who are interested in its nature.

Last year, a team of Kline, a high-quality market intelligence has visited Bangladesh to collect data on this market for their research purpose.

But, they could not reach that conclusion on this undefined market because of the lack of reliable information.

When you start analysing this market, your focus will be on the growing demand; however, market insiders say that around 70 per cent market shares belong to various brands altogether, which is still undefined.

The number of existing brands is 150 and the number is increasing day by day. More lubricating oil brands are yet to enter in this open market.

Market leaders are enjoying their market share is not true at all. It is already flooded with many global and local brands.

We have closely monitored this market for the last few years. We found this market is indifferent to other markets. It is open but difficult to deal with it.

The most market has its own value chain, which is defined, sometimes linear to understand. However, this trade is not like that. Various uneven factors influence this market to move on.

Global Agricultural Lubricants Market Eyeing Growth

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Lubricants Oil Market
Agricultural Lubricants Market

The global agricultural lubricants market is projected to increase at a compound annual growth rate of 4.53% during the period 2018-2022.

This market is worth 2.48 Billion USD by 2022.

The Asia Pacific is expected to witness the highest growth in the agricultural lubricants market during the forecast period.

One of the major drivers for this market is the high adoption of agricultural machines which will eventually reduce the human workforce.

Increasing support from governments, combined with increasing labour costs are encouraging farmers to adopt mechanization on a high scale.

The latest trend gaining momentum in the market is the adoption of precision farming techniques.

These techniques provide higher or equal yields with lower production cost than conventional practices.

Further, one of the major factors hindering the growth of this market is the vitality in raw material prices.

The fluctuation in the raw material prices will eventually affect the costs of agricultural lubricants.

The reduction in arable land is the ongoing challenges for this market.

China and India are large consumers of farm tractors, and therefore, agricultural lubricants.

This, in turn, is expected to lead to the growth of the agricultural lubricants market in the region.

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