VietNamNet Bridge - With an annual growth rate of 7-8 percent per annum, the Vietnamese lubricant market has attracted foreign brands, especially as Vietnam has now signed many free trade agreements (FTAs). 

Five years after leaving, the US brand Exxonmobil returned to the country in mid-November 2015, introducing its strategic distributors in Vietnam.

Three companies have been appointed as Mobil’s distributors, including TAT Petroleum Viet Nam which will exploit the market from the south to the north of the central region, PAN which will cover the northern market, and Xich Dao which will provide lubricant products to the navigation sector.

In this comeback, Exxon Mobile brings many kinds of products, from lubricant for motorbikes and trucks to ones for industries. The products are imported from Mobil’s factories in South Korea and Singapore.

Mobil’s Yasser Al-Azzawi said Mobil returned because Vietnam is still one of the fastest growing markets in the world.

His words coincide with a report of the Vietnam Automobile Manufacturers’ Association (VAMA) which showed that the automobile sales of VAMA’s members increased sharply by 43 percent in 2014 compared to 2013, while the sales have increased by 53 percent so far this year. The automobile industry in Vietnam is also among the fastest growing markets in the globe.

Meanwhile, Vietnam’s motorbike market is the fourth largest in the world with 3 million products sold every year. The rapid urbanization process promises great potential for the light truck, bus and trailer markets, with higher demand for lubricant for the products.

As a member of the ASEAN Economic Community (AEC), Vietnam will have to cut tariffs on lubricants and lubricant materials to zero percent from 2016. This means that once tariff is no longer a barrier, lubricants will be cheaper.

New race begins

The Vietnam Petroleum Association estimates that the lubricant sector saw 4.5 percent annual growth rate in 2010-2015 with 55 percent of output consumed in the south, 30 percent in the north and 15 percent in the central region.

The return of Exxon Mobil and the presence of two new brands – Nippon Oil and Idemitsu from Japan – has created a lively market.

JX Nippon Oil & Energy’s JX Nippon factory in Hai Phong City can churn out 40,000 tons of products a year, while Idemitsu’s factory can put out 15,000 tons.

The other big companies, including Castrol, Shell and Chevron, are reported to be planning to scale up their investments in Vietnam.

Shell Vietnam’s CEO Le Duy Thanh said Shell strived to double its growth rate in 2015, while seeking opportunities to expand its market share from 8-10 percent at present to 13 percent.

NCDT