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Retail lubes mart turns around clocking 13% growth, says AC Nielsen study

29-December-2004
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Retail lubes mart turns around clocking 13% growth, says AC Nielsen study

After a two-year-long depression, lubes market is finally looking up with the retail market registering 13 per cent growth during the april-june 2004 quater versus same period in the previous year, claims a recent AC Nielsen audit on the lubricant market. After a poor monsoon in 2002, the market for lubricant sales declined steadily, with a reduced demand from farmers experiencing lower volumes of agricultural output to transport.

An official statement on the study quoted Amita Shetye, Associate Director, AC Nielsen, as saying, “The retail market for lubricants seems to have overcome a debilitating phase brought upon by unexpected events in the external environment. The upward indication in the AC Nielsen Lubricant Audit is a clear sign of this.”

Diesel Engine Oils (DEO), which are a significant contributor to the lubes market in India was largely impacted. The 10-day nationwide truckers strike that resulted in lower fuel consumption and a whopping 30 per cent drop in lubricant off-take on a year-on-year basis further aggravated this downtrend.

A variety of factors appear to have contributed to this revival. Fundamentally, rising affluence and convenient auto loan financing resulted into an increased number of new vehicles on the roads. Moreover, an adequate monsoon in 2003 has meant a creeping improvement in farm output which has translated into a greater need for transportation and hence lube oils.

Another interesting fact is the rising contribution of new-generation 'Turbo Jet' lube oils in the retail lubricant market. Over the past two years, the 15W/40 grade typically used in heavy commercial vehicles like trucks and 20W/50 grade of diesel engine oil used for economy segment diesel engine cars and utility vehicles have increased steadily.

“In the beginning of the current fiscal the contribution from 15W/40 stood at 5.7 per cent and the contribution from 20W/50 stood at 2.6 per cent. The contribution from these newer grades though growing, may seem small at the moment, this is directly related to the aggressive increase in the unit sales of vehicle-types that consume these oils. As evidence of this, the contribution of the 20W/40 grade has slipped over the past year with its contribution to the category dipping from 94 per cent to 92 per cent in 2004,” the release quoted Shetye.

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