Passenger car engine oil expenditure nearly $31 million USD in first half of 2012 in Jakarta and Surabaya auto market
During first six months of 2012 over US$ 31million worth of mineral and synthetic car lubricants was sold in markets of Jakarta and Surabaya. Special…
One reason for this is that the intervals between car servicing are longer and though car owners have to shell out extra money there are certain other benefits that far outweigh the cost which also at the same time enhancing vehicle performance. Taking into consideration demand in Jakarta and Surabaya, more preference was shown to synthetic oil of base viscosity of 10W-40 which proved to be the most popular. 15W-40 was also a major selling product in the mineral segment.
Customers are also steered to a particular product based on recommendations of their vehicle mechanics or through word of mouth. This is what can prove to be very important in the selection of a particular lubricant and hence the company has also stepped up their advertising strategies focusing not only on customers but also on auto mechanics and store owners so that they are well versed with all that there is to know about these products.
Auto news release: Car engine oil market in Jakarta and Surabaya worth nearly USD31 million in first half of 2012
Car owners in high traffic Jakarta and Surabaya used around 5.9 million liters of engine oil in the first half year of 2012. Latest GfK Indonesian retail audit report for passenger car engine oil registered overall sales of the mineral and synthetic car lubricant market in these two major Indonesian cities to be approximately USD 30.9 million during this six month period.
As the most developed and trend setting parts of Indonesia, car owners in Jakarta and Surabaya have been displaying significant reception towards synthetic motor oil. Despite its higher pricing, synthetic lubricant now accounts for nearly half (49%) the total car engine oil volume sales; almost on par with organic/mineral engine oil. In terms of market value, synthetic car engine oil represents around 60 percent, contributed by consumers who bought USD18.3 million worth of products in total so far.
“Looking at the pricings of the different motor oils in quarter two this year versus the same period last year, we have observed a higher price surge in the synthetic oil segment as compared to mineral oil, at 9.4 versus 7.5 percent,” noted Mr. Guntur Sanjoyo, general manager of GfK Indonesia. “However, discerning consumers who recognize the benefits of using synthetic oil and those who prefer longer intervals between their car-servicing do not seem to mind forking out that extra money to enhance their car performance.”
According to GfK Indonesia’s retail tracking in the two cities, synthetic oil with base viscosity of 10W-40 is most popular in the segment, while 15W-40 is the best-selling base viscosity in the mineral segment. GfK recorded about 31 active brands in these two cities with a wide range of 131 product variants.
Findings also revealed that the average price of the top three selling products in the key synthetic segment is two percent higher than the market average of USD 6.10 per liter. In the mineral segment on the other hand, a different trend is revealed where the average price of the top three brands in key mineral segment is five percent lower than the segment’s market average of USD4.30 per liter.
“Competition within the synthetic oil category is stiffer due to the wider range of brands and products that are available to consumers at prices which may vary significantly,” highlighted Mr. Sanjoyo. “Brand owners should pay special attention to the different consumer dynamics presented by the two segments.”
Another important factor that impacts the success of brands is the accessibility aspect. Based on GfK insights, the top three selling brands have an extensive distribution reach of 70 percent or more within the replacement market, which contributes to their high combined market share of 70 percent sales volume in most of the retail outlets.
“Aside from an effective distribution strategy, recommendations by personal contacts like relatives or workshop mechanics can prove to be very important for such a product of low consumer involvement,” commented Mr. Sanjoyo. “Hence, advertising campaigns, in-store POS and display materials for engine oil and basic product training for retailers are extremely eminent as well. The focus should not be aimed solely at the consumers but also target mechanics or store owners so that they are sufficiently equipped with the necessary information to explain the benefits to their customers,” Mr. Sanjoyo recommended in conclusion.
Since the beginning of 2011, GfK Indonesia commenced tracking of passenger car engine oil sales in open retail channels, which covers car garage, fast fitter, oil specialist and tire specialist channels.
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