LOCAL REPORT Canada Caitlin Jacobs, ILMA, and Robert Bittner
The Canadian lubricants market seems quite similar to the U.S. due to its shared language, culture and brands. But for Canadian lubricant manufacturers — and lubricant companies elsewhere that wish to serve the Canadian market — there are important distinctions shaping the marketplace.
As the world’s ninth-largest economy, Canada’s real gross domestic product (GDP) grew about 2% per quarter in the first half of 2024, which is the most recent data available from Canada’s Office of the Chief Economist. That is slightly lagging global growth of 2.8%, but on pace with other developed nations.
New motor vehicle registrations in the country reached 483,287 in the third quarter of 2024, according to Statistics Canada. That’s an increase of 5.7% year over year, though it’s a slowdown of 5.5% from the second quarter of 2024. Plug-in hybrid vehicles grew the fastest among all vehicle fuel types for the fifth quarter in a row, jumping 43.6% in the third quarter. They were followed by battery electric vehicles (28.1%), diesel vehicles (20.8%) and hybrids (19.6%). Registrations of gasoline-fueled cars actually shrank by just over 1%.
A significant trend noted by Pickering, Ontario-based Big Red Oil is the increasing demand for full-synthetic motor oils, particularly among customers with newer vehicles. However, this rise has also led to an unsettling prevalence of counterfeit or substandard oils in the market, often sold at lower prices. These unlicensed products can pose serious risks to vehicles, potentially causing engine damage or failure. Robert Lennox, who founded the company in 1991, emphasised that authentic oils must meet specific standards set by organisations like the American Petroleum Institute (API) or vehicle manufacturers.
As Canadian consumers become more price-sensitive amid perceived economic struggles, the appeal of cheaper, unlicensed options has grown, presenting a dual threat to both consumer safety and industry integrity. Big Red Oil, recognising this danger, conducted independent testing on suspicious products and found instances of mislabeled oils, such as hydraulic oil being sold as motor oil.
Greg Forsythe, Director of Business Development and Marketing for Forsythe Lubrication Associates in Hamilton, Ontario, has also observed a decline in product consistency and quality, which he attributes to cost-cutting measures.
In response to these challenges, Big Red Oil is proactively educating customers about the differences between licensed and unlicensed oils. The company is also introducing a new, cost-effective full-synthetic motor oil that is API-approved but does not carry GM Dexos licensing, thus appealing to a broader customer base and allowing dealerships to save significantly on orders.
ExxonMobil, Shell and Petro-Canada dominate 60% of Canada’s lubricants market, according to Research and Markets. Castrol, Fuchs, TotalEnergies and other multinational companies also hold significant market share. “Alongside these major players,” they note, “there are other smaller and regional suppliers operating in Canada which focus on niche markets and providing specialised services.”
For foreign lubricant manufacturers looking to enter the Canadian market, Lennox highlighted hurdles such as currency fluctuations and the challenges posed by a highly competitive landscape often characterised by “rock bottom” pricing.
Lubricant prices in the Greater Toronto Area are decreasing, yet operational costs continue to rise, including fuel prices impacting transportation. Big Red Oil remains committed to building genuine relationships with customers and educating them on the value of quality products over cheaper alternatives.
This article has been updated with new statistics and data, and edited for brevity. It originally appeared in the July/August 2024 issue of ILMA’s Compoundings magazine. [1]
ilma.org
[1]
https://ilma.ygsclicbook.com/pubs/compoundings/2024/ julyaugust-2024-/live/#p=31
LUBE MAGAZINE NO.185 FEBRUARY 2025
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