The research firm IBISWorld recently updated its report on the lubricant industry, forecasting that the sector’s revenue should increase strongly as economic growth takes hold over the next few years.
This is expected to happen in spite of the contraction in takings that was witnessed during the last two years.
Throughout the recession, the lubricant manufacturing industry suffered from decreased revenues due to a fall in consumer incomes and, subsequently, in the demand for manufactured products. Production of lubricants declined as consumers put off buying new cars, hoping for better times round the corner, while also driving the vehicles that they owned less often. These changes in behaviour reduced their need for automotive lubricant products, including conventional as well as synthetic options, such as the popular engine oil Mobil 1 New Life 0W/40.
In spite of lubricant industry growth that occurred during 2010 and ’11, the production of lubricants fell in 2012 and is forecast to decrease again during 2014, with associated lower industry revenues. However, over the next five years, returns to the sector are expected to grow once again by around four percent a year, according to IBISWorld.
Increased consumer demand is predicted to drive the growth in lubricant manufacturing, thus boosting revenues. Higher profit margins, due to savings made in areas such as operating costs, should also cause industry takings to increase. When these factors are combined, they should lead to lubricant industry revenues reaching around $21.8bn in total by 2019, if IBISWorld’s forecasts are correct.