LOCAL REPORT Germany Paul Stephenson, OATS Ltd

Germany, with a population of 83 million people, is a key member of the European Union, and since the end of WW II, it has become an industrial powerhouse. With unemployment currently at 3.1%, living standards are generally high, although economic development of the heavy-industry region - formerly known as East Germany – still lags the former West German regions.

The vehicle parc, manufacturing and sales Germany is the birthplace of several famous car marques and its auto industry is also one of the largest employers in the world, with over 820,000 employed, and ranks fourth in terms of production behind China, USA, and Japan.

German vehicle manufacture is generally known for its competitiveness and innovation. Production in the first half of 2019 decreased by 12% with more than 75% of cars produced in Germany being exported. The downturn suggests a precarious future for Germany’s key industry. Daimler, Audi, Continental and Bosch all report thousands of job losses, while the VDA suggests 70,000 jobs will be lost in gasoline and diesel engine production alone by 2030.

The total number of vehicles on Germany’s roads in 2019 grew by c1 million to 64.8m versus 2018 with 72% of these being passenger cars. VW remains the most popular brand – accounting for one fifth of all vehicles, with Opel and Mercedes selling about half of VW.

Base oil production

Germany is totally dependent on imported crude oil. It has mainly relied on Russia, the North Sea, and North and West Africa for crude oil supplies, imported via four main trans-national pipelines and four ports. Refined product comes from 13 German refineries with a combined capacity of around 106m tonnes. Competition has increased due to consolidation and the entrance of major foreign players, including Russia’s Rosneft, which has increased its refinery ownership.

Lubricants production and market Germany’s oil industry is well supported by lubricants


producers and sets high standards for manufacturing. Germany is the only country in the world to maintain that Group IV base oil is the only true synthetic base oil, with Group II and III considered as mineral oils, albeit of high quality.

Formulations are based on European ACEA specifications although, as with many regions around the world, OEMs are increasingly demanding additional own-brand tests and products. This has increased manufacturer and supplier costs for approval licences.

Whilst crankcase fluids have seen a decline, reflecting the global trend, transmission fluid volumes have risen due to the uptake of automated and dual clutch gearboxes, which generally require an increased oil volume.

From about 2015 onwards, lubricants consumption patterns saw a significant increase in ultra-high- performance products – 0W-30 being the most popular, but 0W-20 also taking an increasingly significant market share. Since 2004, 5W-30 has dominated mid-market products, along with OEM-specific grades.

In terms of specification of car engine oils, VW spec products take a 25%+ share of the overall market, with GM (PSA Group), BMW and Mercedes-Benz specs accounting for around 5% each.

In summary As Europe’s leading automotive manufacturing nation, Germany is likely to play a key role in setting the direction of the industry over the next decade. This, in turn, is certain to have a direct impact on lubes formulation and demand, particularly with the existing dominance of OEM specs, as well as the growth of ultra-low viscosity, fully-synthetic and EV/alternative power sectors.


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