The volatility of oil prices and the devaluation of currencies of Nigeria and South Africa are set to provide a huge boost for the production of automotive lubricants in the two countries, according to research from growth consultancy Frost & Sullivan.
The ‘Analysis of the Automotive Lubricants Market – Nigeria and South Africa’ report was published as part of Frost & Sullivan’s Future of Chemicals & Materials in Infrastructure & Mobility Growth Partnership Service programme. The programme also covers construction chemicals and materials, including paints and coatings, industrial adhesives, cement and cement additives, thermal insulation, and lubricants.
Frost & Sullivan visionary science industry analyst Lynessa Moodley notes that the combined markets of South Africa and Nigeria are valued at about $2.14-billion and are primarily driven by demand for engine oils, but there has been a perceptible rise in end-user demand for other lubricants like transmission oil, gear oil and coolants.
She points out that the hike in demand for lubricants stems from a rising prominence of the middle class in both countries, which has boosted vehicle sales.
Nigeria’s motorisation growth rate of 8.5% a year is tied to the country’s gross domestic product (GDP), which has increased by 7% in the past decade.
Meanwhile, South Africa is a well established vehicle manufacturing hub in Africa and this sector is expected to flourish over the next three to seven years, translating into a more expansive market for automotive lubricants.
The number of old and new vehicles in the two countries presents a myriad of opportunities for automotive lubricant manufacturers.
In Nigeria, about 80% of the vehicles on the road are second hand and they will require more frequent lubricant drains in the long term, contributing to the volume demand of automotive lubricants in Nigeria.
“Improved vehicle technology in newer model vehicles will require fewer lubricant drains,” says Moodley.
She adds that the market is moving towards higher-quality, specialised and synthetic lubricants, as well as increased end-user awareness on the importance of lubricant drains. “This can primarily be attributed to pending government legislation regarding emissions, improved engine technology and original- equipment manufacturers’ requirements for fuel efficiency.”
The research from the report suggests that lubricant manufacturers can stay afloat and even strengthen their market position by enhancing awareness and educating users on the importance of frequent lubricant drains and using appropriate lubricants.
Further, this will also stave off competition from the informal automotive lubricants market, as South African and Nigerian end-users are apprehensive regarding the use of synthetics and lack understanding of their benefits.
“This should prompt lubricant manufacturers to conduct extensive marketing and awareness campaigns. “In addition, fostering interregional ties between Nigerian and South African [manufacturers] could go a long way towards creating a collaborative environment that benefits all the stakeholders and, ultimately, drives the market forward,” Moodley concludes.