1. The Vietnam Lubricants Market generated VND ~ Tn Revenue in 2021 owing to the country’s high oil imports and rising automobiles sales.
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The boosting economy of the Vietnam has been supported by the growth of revenues generated by the manufacturer’s offering lubricant oils to various customers across automotive and industrial sectors. Additionally, a major increase in the usage of automotive lubricants rather than industrial lubricants has been brought about by the country’s rising automobile sales. The country’s overall sales of motorbikes have climbed significantly, which is majorly responsible for the increasing sales of automotive lubricants. Major reason behind the growth of market is that Vietnam has the 4th largest 2-wheeler market in the world as consumers in the country rely on motorcycles rather than passenger cars as it is more flexible, convenient and are far cheaper than cars. Whereas, the industrial sector in the Vietnam has been growing with fast pace and further expected with grow by around double digit CAGR during 2021-2026.
2. Up-scaling Metal & Mining Industry, escalating demand for engine oil and Automobiles sales are the major growth drivers for Vietnam Lubricants Market.
With 889,756 passenger cars manufactured in 2021, automotive will be the industry’s largest consumer. Shipbuilding and steel demand are both increasing, implying an increase in demand for lubricants. Furthermore, the earnings of Metals and Mining companies have grown 59% per year over the last three years, encouraging additional production in the country and pushing lubricants demand in the coming years. Also, in recent years, the automotive/transportation industry fleet size has been one of the largest consumers of lubricants in Vietnam. Automobile sales in Vietnam increased, expanding the customer base for the country’s lubricant market players. Furthermore, the Vietnamese government is aggressively promoting industrial growth, particularly in the manufacturing sector.
3. Price Fluctuations, Low Labor Force, High Competition and Increasing Electric Vehicles penetration poses major challenges in Vietnam Lubricants Market.
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One of the biggest challenges in the market is the fluctuating crude oil price and hence changing prices of finished lubricants, which in turn impacts the margins earned by the sellers of lubricants in the Vietnam. In addition, Vietnam has a small labour force of roughly 56 million people, which is roughly 14 times fewer than the number of people in other nations like China. In light of the fact that lubricants needs to be renewed on average every 4,000 running hours, this will impede the expansion of the lubricants market.
On the other side, the rise in competition has made sustainability challenges more pressing, especially in high-risk and high-return industries. Foreign firms are drawn to the Vietnam market because of the growing demand for lubricants and its potential. Lastly, increasing awareness on environmental degradation, fuel efficiency and concerns on pollution levels across the country will contribute to the emergence of EVs market in Vietnam compared to fuel operated vehicles. Hence, its increasing penetration poses a threat to lubricants market.
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