The outbreak of pandemic COVID-19, has impacted the market negatively as the demand for automobiles during the lockdown period came down to almost zero for the first time and the production for vehicles was stopped in order to maintain the social distancing norms and prevent the spread of the virus.
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However, with the gradual opening of the economy demand is returning to the market and it is expected that the market will recover in the second half of 2021.
With the growing demand for vehicles and government incentives to OEMs to promote the Make in India initiative, several OEMs from all around the world are investing heavily in the country to set up their production units to meet the local as well as global demand. The other factor acting as the driver for the market is the increasing average age of vehicles on road.
Ethylene glycol is the most preferred automotive coolant. However, ethylene glycol is highly toxic and requires careful disposal. Therefore, the coolant industry began manufacturing coolants that were less toxic. The passenger cars segment is expected to grow with high rate because of high demand of cars in the country.
Key Market Trends
Increase in Investment in Automobile Sector in the Country
In order to keep up with the growing demand, several automakers have started investing heavily in various segments of the industry during the last few years. With the FDI policy for the automobile sector allowing 100% FDI under the automatic route, FDI equity inflows in the automobile industry are increasing at a high rate.
Several global OEMs are investing in the country with either joint venture with established players or after the FDI norms relaxations investing directly in setting up their own production unit or enhancing the sales and dealership network across the country. Some of the recent/planned investments and developments in the automobile sector in India are as follows:
- In November 2020, Mercedes Benz partnered with the State Bank of India to provide attractive interest rates, while expanding the customer base by reaching out to potential HNI customers of the bank.
- In October 2020, MG Motors announced its interest in investing INR. 1,000 crore (USD 135.3 million) to launch new models and expand operations.
With the growing investments in automotive sector the production of automobiles in the country is expected to ramp up in order to meet the growing demand in the country. The trend is expected to continue during the forecast period.
Ethylene Glycol Segment Captures the Largest Market Share
Ethylene glycol is a toxic material that can result in birth defects, reproductive damage, or even death. Thus, it requires very careful handling.
Ethylene glycol has many commercial and industrial applications including antifreeze and coolant. Ethylene glycol prevents the car’s engine from freezing in the winter and acts as a coolant to reduce overheating.
Some of the ethylene glycol-based coolants available in India are:
- The Wuerth Anti-Freeze Coolant is being adopted in different countries like Indian, Japanese, American, European, and Korean vehicles by various automakers. The color of the oil is green, and it is ethylene glycol-based.
- The Euroils Euro Turbo Cool Coolant Concentrate Green with ethylene glycol base makes it ideal for radiators. The oil has an oil-to-water dilution ratio of 1:2.
With the increasing adoption of ethylene glycol based coolants in automobiles as it has the cost advantage over propylene glycol, the segment is expected to grow with high rate.
The intensity of competitive rivalry is high due to presence of both domestic and international players. Some of the major players in the automotive coolant market includes India Oil Corp., Castrol, Exxon Mobil, Valvoline etc. Additionally, there is also a trend of some OEMs, like Audi, BMW, VW, Suzuki, etc., supply coolants under their own brand name, further impacting the competitive landscape. For instance, India’s largest passenger carmaker Maruti Suzuki India (MSIL) launched Ecstar, Suzuki’s global brand of lubricants, coolants, and car care products in the country.
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