While the Eurozone economy is finally showing signs of a slow recovery (despite the Greek travails at the UNITI Fuel and Lubricants conference in Stuttgart last month we were presented with a range of fascinating insights into the future of the European and global automotive and lubricants industries.
Prof Cornel Stan suggested there were 10 types of car segments (from SUV to City to Luxury) and proposed that future propulsion solutions for five of those segments could be different combinations depending on differing influences such as usage and willingness to pay. The five examples he gave were:
- Luxury class: full hybrid – propulsion by connected IC engine + electric motor
- Medium class: propulsion by compact IC engine / current generation on board by fuel cell
- City car: electric propulsion – battery
- Country car: range extender
- Economic car: propulsion by small spark ignition engine with alcohol combinations of thermal and electric propulsion modules, renewable energy sources
In essence, the future for cars will not be a simple option for either manufacturers or consumers.
Meanwhile, Concawe reported that the UK had developed a consensus road map on the potential rollout for low CO2 technologies. Consistent with the Stan model, the organisation stated: “Individual manufacturers will implement technologies which best address their own brand values and market sectors”. This comes at a time when the UK's SMMT reports record-breaking sales of ultra-low emission vehicles (ULEVs).
It is worth looking back. Since 1992, From Euro 1 to Euro 6 we have seen a 97% reduction in particles and an 85% reduction in NOX, which means much has been achieved. However, European cities are still not seeing full clean environments and ambient NO2 (and PM2.5) limits from 2010 have still not been achieved. This is despite the targets being embedded in legislation and clearly publicised since mid-1999.
There is still a clear claim that, on the road, diesel cars haven’t delivered the NOx reductions promised by Euro standards. As a result, what we can expect is a new legislative tool to measure emissions over ‘real driving’ on the road. The question is when will this really come into force. Certainly China is getting the message, having brought forward tougher emissions legislation by a year. Like Chinese residents in Beijing and other cities, the European People await the outcome.
Also at the UNITI conference, Toyota’s Satoshi Hirano referred to SAE 0W-16 becoming available in Japanese markets without ILSAC or API specification. So, will Honda, Nissan, Mitsubishi and Toyota be the ones to help move the lubes industry in the right direction? Already even lower viscosity grades are being proposed to SAE and approved, such as xW-12, xW-8. Change is set to continue and, in Europe, will undoubtedly be supported by data from the likes of OATS and ATIEL.
So what are the implications for the lubricant producer and marketer? Firstly, with an installed base (vehicle Parc) averaging 8.8 years old (as reported by Shell Germany it will take a significant period of time for the new vehicles with ever-lower viscosity requirements to be purchased and thus for the whole parc to undergo change.
While there should be time for lubricants manufacturers to readjust, Lutz Lindemann of Fuchs concluded that there is also change in the development paradigm. He argues that higher complexity is leading to a significant increase in development costs. Whatever the short term economic impact, in Europe the progressive tightening of environmental legislation will lead to further revisions of lubricant specifications, along the lines implied by the Japanese.
Lubricants marketers seeking to do more with fewer products, (each costing more to develop will find the challenges of selecting profitable channels increase. This requires systems and solutions that permit analysis of opportunities and accurate market assessment. OATS’ earlFUSiON platform and the advanced Product Manager solution has been developed specifically to help meet that challenge.
On the subject of challenges, this month's White Paper - from the RPS Energy team of John Sargeant and Stuart Speding - focuses on what might happen to the lubes industry if ExxonMobil were to buy BP and the Castrol brand. Not beyond the realms of possibility and a fascinating read. We are also delighted that Lutz Lindemann's full presentation will appear as an OATS White Paper next month.
In the meantime, to find out more about earlFUSiON, or comment on anything you have read in this month's Bulletin, simply contact us by e-mail or follow our updates on social media via Twitter, Facebook, LinkedIn and Google+.
Sebastian Crawshaw
Chairman - OATS