We made an evaluation of 2021 with Ayhan Köksal, Castrol Turkey, Ukraine and Central Asia Director. Despite many difficulties and negative developments such as the pandemic, fluctuations and price increases, 2021, which is marked with growth for the lubricants industry, is recorded as a successful year for Castrol.
As we get closer to the end of the year, we would like to start with an evaluation of 2021. How has this year been for Castrol?
In general, despite all the challenges throughout the world, there is a constantly growing lubricants market in Turkey. We see that the market has grown by 6-7 percent in the last two or three years. Automobile and commercial vehicle sales, which have reached approximately one million units, also have an impact here. However, the decline in new vehicle sales in 2018 and 2019, some global economic fluctuations, and ultimately the pandemic totally changed our lives. First, new vehicle production stopped. After a while, factories started to work again. In this period, there was a great demand for second-hand vehicles. Despite these challenges, the market continued to grow in 2020 and 2021. As Castrol, we maintained our leadership by growing above the market average in all critical segments we targeted.
Despite the fluctuations experienced, we maintain our market leadership in multigrade engine oil usage in Turkey, according to the Petroleum Industry Association (PETDER) data for 2020 and the first three quarters 2021. Our sector, which grows above the national economy every year, grew by 9 percent last year despite the pandemic. As per the data for the end of September this year, we see that our industry has grown by over 12 percent. In the industrial field, we continue to grow in the sectors we provide value-added services.
How do you see Turkey's place in the global lubricants industry? Has this changed during the pandemic?
Naturally the pandemic has winners and losers. We, as Castrol, are on the winning side. The credit for this achievement goes to our superior quality products, excellent customer relations and service quality, and most importantly, to our ability to find fast and creative solutions to many new problems brought by the period. We think empathy was the most needed thing in this period. With this approach, we provided a lot of material and moral support not only to our employees but also to all our stakeholders, business partners and customers. We have taken bold steps so that they can protect their businesses, employees and themselves. In this way, we became the only country in the Castrol world to achieve volumetric growth in 2020. We have increased our market share in all the segments we focus on in Turkey. This momentum was reflected in the PETDER results this year as well. We increased our market share in multigrade engine oils to 32.5 percent in the first 9 months. Again, we maintain our leadership by simultaneously increasing our market share in both passenger car, heavy vehicle and industrial oils segments. With this growth, we are one of the countries of Castrol that stand out with its performance in the world. Castrol brand has existed in Turkey under all conditions for over 65 years and is growing day by day. With the success we have achieved in our country, Castrol Turkey has become a unique example and a great power in the Castrol world. We brought Turkey ahead of many developing countries as an innovation, production, export and human resources base in the field of lubricants, making it the second most strategic market after China.
Which products do you produce and export in Turkey? Can you share the export details?
Our plant in Gemlik is one of eight Castrol production plants in Europe and we produce approximately 90 million liters of lubricants annually at this plant. We have decided to increase our investments in our Gemlik plant due to its location, its convenience for capacity increase among our other plants in Europe, as well as the competitiveness of our production costs. We regularly invest in our plant every year. According to our strategy that we created at the beginning of 2021, we plan to invest a total of 30 million dollars in our Gemlik plant in the next 5 years. In this way, we aim to increase the production capacity. We will make 10 million dollars of investment in 2021 and 2022. In this way, we will expand our Gemlik plant by carrying our increasing exports even further. This year, we added Spain, Qatar, Afghanistan and Lithuania to our export countries, with them our export geography has expanded to 24 countries. Other countries we export to are Azerbaijan, Kazakhstan, Turkmenistan, Kyrgyzstan, Tajikistan, Uzbekistan, Georgia, Northern Cyprus, Iraq, Dubai, Russia, Palestine, Ethiopia, Greece, Ukraine, Indonesia, Belgium, England, Germany and Italy.
At Castrol, our business is fluid engineering. We have contributed to the movement of the world for over 120 years. We achieve this by allocating large budgets to our technology development and marketing activities each year. These budgets are spent by determining the needs of the markets globally. Apart from the investments we will make in Gemlik, we have planned to allocate a budget of over 100 million dollars for the next 5 years for the innovative investments we will make for our customers.
Covid-19 still has a certain impact on base oil supplies. Freight prices increase, there are new formulation demands due to environmental concerns. As Castrol, which steps do you take in this regard?
As Castrol, we anticipate the use of alternative base oils in the new formulations we have developed to ensure the sustainability and up-to-dateness of our product portfolio. We have products that contain Group I base oils as well as Group II, Group III and PAO base oils in our portfolio. Our priority is to develop the management that will ensure the continuity of the supply of Castrol products and to provide this flexibility in terms of both formula and alternatives in our product portfolio.
The Waste Oil Management Regulation in Turkey has brought the “the obligation to use base oils obtained from waste oils at a rate of 8 percent in lubricant production for the year 2022.” To what extent does this obligation affect you?
We have started our evaluation procedures since the publication of this regulation. This issue covers all companies engaged in production in the lubricants industry, including us. We also follow the regulatory requirements through PETDER, of which we are currently a member.
Could you tell us about your new project CARAMA? We would love to hear how you brought this idea to life.
As Castrol, in addition to our products equipped with superior technology, we aim to support vehicle users in their service and maintenance needs. Beyond a liquid brand, we want to transform the Castrol brand into a care brand as part of our future vision. For this purpose, we are working on business models that we can grow together with all our customers and partners. To that end, we have established an experienced unit working only on innovative digital and offline solutions in our new organization. CARAMA is a digital product that we will launch in Turkey for the first time in the world. CARAMA will be Turkey's first private service search platform for vehicle owners. It will offer opportunities such as finding the nearest private service according to the user’s service need, comparing the services according to comments and scores, and making online appointment. We will introduce this new platform and share detailed information at a launch event we will organize very soon.