Automotive lubricant market in Myanmar has recorded significant changes within the last three years, with the emergence of mid-end segment.
The end of international sanctions against Myanmar has relaxed import procedures including lubricants as it has increased the number of vehicles, leading to more products segmentation in the market.
However, customers remain lacking of knowledge on lubes and are often lured by promotion and sales incentives – making the competition fiercer for more than 200 brands including locals, Asians and internationals, a new report, “Winning Myanmar’s Automotive Lubricant Market,” by B2B growth strategy advisory firm Solidiance revealed.
Ever since of the relaxation of import car procedures between 2010- 12, the number of vehicle ownership rose to 4 million as of July – along with increasing imported cars, which accounted for 92 percent compared to locally produced units. Japanese brands are mainly preferred as it is perceived to have higher durability, taking up to 80 percent of the total car circulation in the country, particularly dominated by Toyota.
Accounting for 65 percent of total lubricant consumption in Myanmar, the automotive lubricant market is now considerably a lucrative target segment, the report said. Outnumbering consumption in the industrial segment, this is due to sharp increase of vehicles import over the last few years, it added.
The increase of number of vehicle ownership as well as imported cars led to a positive growth of automotive lubricant market and products segmentation in the market. Low-grade lubricant accounts for 60 percent, medium grade 35 percent, and high grade 5 percent – a significant change compared to 90 percent market share by low-end tubes before 2010, the report said.
It said the customers remain lacking of knowledge on lubricants and their purchasing habit tends to be determined by car workshops and retail shops. Myanmar’s price-sensitive customers are often lured by the promotion and sales incentives in the market.
However, Solidiance said only about 50 out of over 200 registered lubricant brands are currently active in promoting and advertising their high-grade auto lube products.
The report said Yangon and Mandalay will remain as distribution lubricant hubs for medium term of five years, and relaxing imports regulation will continue to increase vehicles number and gain demand for lubricants. Furthermore, the automotive lubricant market volume was estimated to reach over 60 million litres by 2013.
Mid-end segment of automotive lubricants started to emerge after 2010s, and there also have been more movements in the high-end lube segment due to expected increase of demand for new car models as imported vehicles are getting more favoured.
However, low-end brands will continue to dominate the market as consumers are expected to remain price-conscious for the coming years, although it will likely lose share to passenger cars segment, the report added.
International and Asian brands which target medium to high-end car lubricants are entering the market, creating fiercer competition across all segments. They will eventually have no other choice, the report said, than pushing their brand image through advertisements, educating the market about the high-grade lubes, and engaging with service centres and authorised dealers to exclusively distribute their products in the Myanmar’s market.