Malaysia is the rising star for these high-cost, high-margin products, due to high car ownership and aggressive promotion, says new market report
Recently published by the chemicals group of Frost and Sullivan is a new analysis of the south east Asian (SEA) synthetic lubricants market from 1998 to 2008.
The report reveals that the total synthetic lubricant market for south east Asia was worth $819 million in 2001 and is forecast to reach $1044.2 million in 2008, at a compound annual growth rate of 3.5%.
The countries examined by the report include Thailand, Malaysia, Singapore, Indonesia, and the Philippines - and of these it is Malaysia that is seen to have the highest growth potential.
The Malaysian population is generally more aware of synthetic lubricants owing to the aggressive promotional activities by various oil companies.
Petronas, the state-owned oil company, has been highly visible at various racing rallies and it has a stake in the Proton car, which is owned by most Malaysians.
Malaysia represents one of the biggest automobile markets in south east Asia, and consumers in Malaysia also desire good quality maintenance for their cars.
These factors will drive the Malaysian synthetic lubricants market to reach $248.6 million by 2008.
The demand for all lubricants is related to the economic health of the region.
The south east Asian economy has slipped in recent years, automotive sales have also suffered a setback, and consumers in the region have become extremely price conscious. Frost and Sullivan expects the gloom period to pass over as the region slowly recovers to its pre-crisis levels of growth. Synthetic lubricants in the region cost four to five times more than that of the cheaper mineral oil-based lubricants.
This will be the major restraint for its growth, what growth there is, is expected mainly from the high-end car owners.
The market for synthetic lubricants is mainly driven by the aggressive promotion by suppliers.
Major oil companies control the lion's share of this market, as they have the financial muscle to aggressively advertise and establish a wide distribution network.
Following the economic crisis, the market has become highly price sensitive and it is a challenge for the suppliers of synthetic lubricants to educate the customers and grow this niche market.
The oil companies have every incentive to do so as the profit margins for synthetic lubricants are very high.
The south east Asian synthetic lubricants market report (4029-39) completes Frost and Sullivan's synthetic lubricants world package, with full reports on the US, European, and SEA markets.
