Who can outperform the 22 billion lube market?

The temperature of the unified lubricant casing has not yet cooled down, and ExxonMobil, a brand with over a century of history in the lubricants industry, is preparing to make a strong comeback in the Chinese market. Yesterday, Lin Guosheng, Deputy General Manager of Lubricants and Special Oils at ExxonMobil (China) Investment Co., Ltd., revealed to reporters that the company plans to open an additional 100 vehicle maintenance centers across China by the end of the year. This expansion will further increase the availability of Mobil 1 lubricants, which are already sold through 200 specialized stores nationwide. Expanding its vehicle maintenance network is a key strategic move for Mobil. In response to Shell’s recent acquisition of Unity, Lin explained that the rapidly growing Chinese lubricants market has attracted numerous global players, all making significant investments. “We are no different,” he said, “but we have a strong sales channel in China. Our main focus is on building a network of car care stores, as many consumers here are highly concerned about engine performance.” The new Baijiao Conservation Stores operate under a cooperative model involving ExxonMobil, distributors, and local shop owners. These stores are strategically located in major cities like Beijing, Shanghai, Guangzhou, Shenzhen, and Chengdu—areas with fast-growing private car ownership. Although ExxonMobil had a three-year plan for lubricants stores, Lin declined to share specific details, citing operational reasons. The Chinese lubricants market is expanding rapidly, with annual growth rates consistently exceeding 10%. As the world’s second-largest consumer of lubricants, China consumes nearly 4 million tons of oil each year. The market size is estimated to be around 22 billion yuan, with foreign brands dominating the high-end segment. Companies like BP, Castrol, Mobil, Shell, and Total control more than 80% of this space, while domestic brands compete for the remaining 20% in the mid-to-low range. In 2003, China’s lubricant consumption reached 4 million tons, with sales revenue surpassing 30 billion yuan for the first time. That year, it overtook Russia to become the second-largest oil consumer after the U.S. Looking ahead, the market is expected to grow by 10% annually over the next five years. Beyond retail expansion, foreign lubricant giants are also targeting vehicle manufacturers. For example, in June, Castrol, part of the BP Group, established Dongfeng Castrol Oil Products Co., Ltd. with China’s largest commercial vehicle manufacturer, Dongfeng Group. From installation to after-sales service, Dongfeng Motor will use Castrol oils across its entire product line. Both parties aim for the new company to reach 30,000 tons in annual sales by 2010, capturing 10% of the market. Additionally, in July, a new 200,000-ton lubricant production line was launched in China, marking the largest U.S. oil supplier’s investment in the region. Industry insiders note that, given the fierce competition, it will take time for domestic brands to gain a foothold in the high-end lubricants market.

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