Traditional vehicle lubricant makers are now facing competition from India’s largest car manufacturer and seller Maruti Suzuki, which has launched its own line of lubricants, ECSTAR.
This is a game-changer. So far, sole lubricant manufacturers faced competition only from their co-branded counterparts (IndianOil makes lubricants for almost all major vehicle manufacturers). For example, Servo, IndianOil’s lubricants and greases brand, has manufacturer approvals for its specific products from two-wheeler companies such as Kinetic, LML and TVS, and four-wheeler majors such as Hyundai and Hindustan Motors. These products, endorsed by vehicle companies, are touted as favourable products at authorised service stations.
Till now, even Maruti endorsed the Servo Maruti Genuine Oil specifically for its entire range of petrol vehicles. But with ECSTAR, things might change, as the vehicle manufacturer has decided to procure the products directly from local suppliers.
“Maruti Suzuki would be giving the specifications and suppliers will offer the product. The lubricants are then packaged and branded under the Suzuki ECSTAR brand,” an industry watcher said.
In its sales pitch, the ECSTAR is supposed to “give you a Suzuki experience that others could not.”
Surfing on the premium claim, the ECSTAR products are also priced higher than their competitors. Lubricant prices vary depending on the quality and requirements, ranging from ₹300 to ₹3,500 a litre.
“Maruti has about 48 per cent market share in passenger vehicles in India, and hence the largest share in the total number of cars serviced at authorised service stations. If they start using their own lubricants, it will negatively impact other lubricant manufacturers like Castrol,” said Rajat Sharma, Founder at Sana Securities and SEBI Registered Investment Advisor.
“Maruti derives up to 20 per cent of its net profit from service income. Engine oil and coolants constitute a major portion of overall service cost, so naturally this will have a positive impact on Maruti’s margins,” he added.
While announcing the product, Maruti Suzuki said that initially the company will offer ECSTAR to its customers at the newly launched NEXA Service workshops and then across its full service network of over 3,000 workshops across the country.
Source: Hindu BusinessLine dated May 07, 2018
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