Ten lubricant brands have opened a tide of price increases, and small and medium-sized dealers are facing greater pressure

November 03, 2023

Ten lubricant brands have opened a tide of price increases, and small and medium-sized dealers are facing greater pressure

"Gold nine silver ten", the oil industry once again set off a "rise" sound.
It is understood that this round Shell, Mobil, the Great Wall, Kunlun and other first-line lubricant brands have raised prices, the increase is generally more than 5%, the highest 10%.

For the lubricant industry, on June 30, the State Tax Administration of the Ministry of Finance issued the Announcement of the State Tax Administration of the Ministry of Finance on the implementation of the consumption tax policy of some refined oil products, which led to a sharp rise in the price of Base Oil such as industrial white oil. Some analysts believe that this will lead to a sharp increase in prices across the industry.

Affected by this, FOss lubricants issued the "FOSS solvent products Price adjustment Notice Letter", announcing that from August 1, the price of related solvent lubricants will be adjusted in different proportions, and the adjustment range is about 10% due to different products.

At the same time, the international crude oil production reduction has led to a tightening of the crude oil market supply, resulting in a rise in prices, which has triggered a violent reaction of lubricant brands.

In early August, Uni-President Petrochemical said that due to the continued high prices of raw materials such as base oil, the price of some products will be raised on August 25, with a price increase of 2-4%.

Subsequently, the South China branch of Sinopec Lubricating Oil Co., Ltd. also announced that from September 22, the sales price of industrial oil, automotive oil and other commodities increased by about 5%, and emphasized the reasons for the continuous rise in production and operating costs, including the international crude oil price rose by more than 20%, the price of chemical raw materials continued to rise, and the RMB exchange rate continued to be low.

After entering September, price hike notice letters came in droves, summarized as follows:

Small and medium-sized dealers face greater pressure
According to F6 data, the maintenance frequency and price of stores this year show a double downward trend, and the demand for lubricating oil in the terminal is reduced, but the upstream manufacturers are still raising prices, resulting in dealers being forced to bear the pressure of price increases.

A lubricant dealer said that now the manufacturer issued a notice to raise prices by 3-5 points, but they did not dare to raise prices to the store, because the lubricant brand is many, high substitutability, once the price is likely to lead to the store to choose other brands. However, the good thing is that the manufacturer officially announced a price increase of 3-5 points, and it may only rise 2 points when it is implemented.

"When the price rises, we dare not rise, and once the price falls, we will also bear the pressure of inventory depreciation." In particular, dealers who do traffic brands have no exclusive advantages, and can only lose money to do activities to attract stores to stock up."

"The pressure of lubricating oil dealers is particularly large, first, the manufacturer of new oil vehicles for life free maintenance; Second, the penetration rate of trams is getting higher and higher, which greatly reduces the demand for lubricating oil. Now the goal is to live first and outlive whoever lives."

Where are the dealer opportunities?

Like the home appliance industry, the rise of local brands is obvious, which also brings more opportunities for dealers.

Data show that the annual consumption of the lubricant industry is stable at about 6.5 million tons, and the market size is more than 100 billion yuan. Among them, automotive lubricating oil accounted for 53% of the total consumption, foreign brands to "Mobil, Castrol, Shell" mainly, accounting for about 27% of the market; Domestic brands such as zero kilometers, Uni-President, Compton, Great Wall, Kunlun, Lopal and other market share continue to increase, seize the remaining market share.

However, from a detailed point of view, "Meijia shell" occupies a larger share of the high-end lubrication market, and domestic brands are mostly focused on the low-end market. The difference can also be seen in the current surge. In the process of "stocking up", channel operators generally believe that the price fluctuation risk of small brands is large, the market awareness is low, and there is easy risk when stocking up. Relatively speaking, big-name product channels are stable, after-sales service guarantee is strong, and it is easy to sell and realize, becoming the first choice for hoarding.

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