In the next three years, lubricating oils are forecast to decrease in price at an annualized rate of 1.5% as the prices of suppliers' key inputs decrease
Los Angeles, CA (PRWEB) January 19, 2015
Lubricating oils have a buyer power score of 3.8 out of 5, reflecting a favorable purchasing environment for buyers. Buyers benefit from a projected decline in the price of lubricants during the next three years in addition to a low level of product specialization and minimal cost of switching suppliers, such as Royal Dutch Shell PLC and ExxonMobil Corporation. However, buyer power is limited slightly due to a lack of available alternatives for lubricants.
Although increasing prices have negatively affected buyers during the three years to 2014, prices are expected to decrease in the next three years. “Petroleum- and crude-oil-based products are critical inputs for suppliers of lubricating oils. During the three years to 2017, the world price of crude oil is forecast to decline at a moderate rate, causing suppliers shrink operating costs. As these costs decline, suppliers will be able to offer lower, more competitive pricing,” according to IBISWorld business research analyst Sean Windle.
Because lubricating oils, such as motor oil and transmission fluid, are necessary aspects of maintaining the efficiency and functionality of many machines and vehicles, they have no practical alternatives. Further, suppliers gain significant pricing leverage because of this knowledge. However, lubricating oil is a homogeneous product, and suppliers typically do not provide customized solutions for buyers. Low product specialization allows buyers to easily compare brands and find alternative suppliers that provide lubricating oils of equal quality. Furthermore, the cost to switch suppliers is low on average depending on whether the buyer has signed a contract and if a breach of contract fee was included. “Because buyers can switch suppliers with ease, suppliers have an added incentive to offer flexible pricing and favorable contract conditions,” Windle says. Combined, low specialization and low switching costs help boost buyer power and offset the negative effects of the lack of practical substitutes. For more information, visit IBISWorld’s Lubricating Oils procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of lubricating oils, also commonly referred to as lubricants. Lubricating oils include industrial oils and fluids (e.g. hydraulic oil, refrigeration oil), consumer automotive products (e.g. passenger vehicle engine oil, gear oil) and commercial automotive products (e.g. heavy-duty engine oil, hydraulic and transmission fluid) and are designed to reduce friction between surfaces and maintain the efficiency of vehicles and machines. Lubricating greases and biolubricants such as cooking oil are excluded from this report.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.