The lubricants industry will retain its importance despite the changing dynamics, and Turkey will play a key role in the electric vehicles market in the medium term with its domestic and foreign sales, according to Aslı Yetkin Karagül, Turkey, Ukraine and Central Asia Director at Castrol.
We would like to start with the COVID-19 outbreak, which is currently one of the top priority issues for all industries and humanity. You, as Castrol, have carried out many support projects during this very difficult period. Could you tell us a little bit about your works?
2020 has been a year that upsets all balances. Together, we see that priorities are reshaped for consumers and customers. Being a reliable brand and having the ability to offer solutions quickly in times of crisis is now more important than ever.
From the time the first COVID-19 case was seen in our country, we as Castrol Turkey have always endeavored to be side by side with the society, our stakeholders and employees, who are affected by this process. We have adapted our business processes to the conditions in order to overcome this period with the least impact for both our country and all stakeholders of Castrol. We have focused on communicating with our customers and consumers, making them feel the support of Castrol in their work and life.
Everyone is affected differently by the pandemic. Not just those who are infected, but everyone can face different impacts. We created the Uzman Eller (Team of Experts) Support Line for the foremen in order to help alleviate this situation. Our foreman can talk to experts who provide personal psychological support or healthy nutrition counseling by phone.
In this period, we have continued our trainings for customers on digital platforms. We have increased our communication methods and I can say that most of them will continue to be used. As a result of our increased sensitivity to hygiene with COVID-19, we provide hygiene and disinfection guidance to our private services, which are the points that are in direct contact with consumers, and we also assist them in material procurement. We have continued to work and produce in our Gemlik facility, taking into account the social benefit. Our office personnel are currently working from home, except for the limited number of employees who are required to be in the office.
We have started new collaborations that reveal the spirit of this period. We have collaborated with the Ahbap Association to support them in their works to meet the needs of foremen and apprentices who are exposed to the negative effects of the COVID-19 pandemic. In addition, we invited foremen and apprentices to join our Uzman Eller platform, where they can advance their competencies.
I believe we have overcome this challenging in the best way possible thanks to our years of experience, strong structure, and close connection with our customers and consumers.
It looks like the future of our industry will be quite different from today. Do you foresee changes in the consumption and usage habits due to the impact of the pandemic, the actions taken for increasing the use of electric vehicles and the rising environmental sensitivities? What awaits lubricant producers?
In recent years, countries have taken several decisions to reduce emissions worldwide. Vehicle manufacturers have already started to work on hybrid and EV solutions. Today it seems like the vehicles to be manufactured in the medium and long term will begin to change from internal combustion engines to hybrid and electric vehicles. It is estimated that more than half of the new cars manufactured will still be internal combustion engine cars in 2040, and by 2050, 70 percent of the newly manufactured vehicles will be hybrid and electric cars. The fact that engine oil will be used in hybrid vehicles, and the need for new technology products such as e-liquids and e-grease will continue to exist for transmission, batteries and powertrain in EVs means that the lubricants industry will preserve its importance in the future.
This means that we will start to see e-liquids, which are developed by targeting new technologies, more often in our lives. In EVs, e-transmission fluids and battery coolants will gain a wider place in our lives in the next five years. Our e-transmission and battery cooling fluids for EVs have already started to be used by equipment and vehicle manufacturers. We see Castrol e-liquids in many EVs in the market, with product developments we have made with parts and equipment manufacturers that already play a key role in the electric car ecosystem. Castrol e-liquids are used in many different vehicles from the cars of SAIC, one of China’s largest vehicle manufacturers, to Jaguar’s I-Pace.
In order to transfer our R&D experience we gained in the global arena, we have established a working group within Castrol Turkey. To be prepared for the period when our country will have a more effective transition to EV technology, we have already started working with vehicle, parts and equipment manufacturers of the hybrid and electric car market. We believe that Turkey will play a key role in the EV market in the medium term with its domestic sales and exports.
We would like to hear your assessment of the first half of the year, both for Castrol and for the industry in general.
There was a growing lubricants market in Turkey until 2019 and the lubricants industry grew by 6-7 per cent in the last two or three years. Automobile and commercial vehicle sales, which reached approximately one million units, had a definite effect on this. However, both the decline in new vehicle sales in 2018 and 2019 and certain global economic fluctuations negatively affected the lubricant industry as well as all other sectors. Likewise, new vehicle sales decreased to 480 thousand units in 2019 from almost a million in the previous years. The impacts of this started to be observed in 2019 and in the first quarter of 2020. According to PETDER figures, the lubricants market shrank by about 8 percent compared to 2018. Automotive sector, which is the locomotive industry in Turkey, still stands out as a sector that has a growth potential despite the fluctuations. Thus, it has a direct impact on the lubricants industry.
According to the Petroleum Industry Association (PETDER) data for the second quarter of 2020, we are still the market leader with our share of 28.8 percent in the use of multi-grade engine oil in Turkey. We ended the first half of the year with a 23.2 percent market share in the automotive lubricants market. In the industrial field, we continue to grow in the sectors where we provide value added services.
What can you say about the production and exports in Turkey?
With its annual filling capacity that exceeds 85 million liters, our Gemlik plant in Turkey realizes 12 percent of the annual lubricant production volume of Castrol’s total capacity for the region, which targets Europe, Russia, Africa and Central Asian countries. Here, we produce 85 million liters of lubricants and derivatives annually. 85 percent of this production is offered to the domestic market and the remaining 15 percent to the foreign market. In addition, we have the flexibility to increase our filling capacity in parallel to the increase in our exports. With our wide export network and capacity, we are one of the top three companies in terms of exports according to the recent list of exporters of the Istanbul Chemicals and Chemical Products Exporters Association. We aim to increase the number of countries and tonnage of our exports. With the new destinations that we expect to be finalized in the near future, the number of our export countries will increase.
Could you share your plans as Castrol for the new period?
As Castrol, we will continue to stand by our customers and stakeholders with our new products and offers in the new period. In early 2020, we introduced the new technology of Castrol MAGNATEC, the most preferred product brand in the category of passenger motor oils. Castrol MAGNATEC was a first in the world with its Smart Molecules. We received very positive feedback when we explained Castrol MAGNATEC, which we took to the next level with the new DUALOCK Technology, to our consumers with commercials and to our foremen with one-to-one organizations.
Moreover, in July, we started the communication campaign for our commercial engine oil brand Castrol VECTON. We also continue to explain the specifications of Castrol VECTON, the world’s first carbon neutral heavy vehicle engine oil in the commercial engine oil group, to our truck drivers through the “Castrol Yol Arkadaşım” (Castrol My Seatmate) platform. Moreover, in addition to engine oil, we are at the preparation phase of some new products that we aim to bring innovation to all lubricant needs of vehicles. We are adding new digital sales channels to our customer portfolio, through which we can deliver our products to our consumers.
Within the framework of Castrol’s global partnership with car manufacturers, now Castrol Turkey provides aftermarket products of Renault and Dacia, in addition to its Renault Formula 1 team partnership. We have carried our partnership with VW in motorsports to a new platform in the field of electric vehicles and e-liquids with VW ID.R. Our long-standing cooperation with Ford continues with Castrol Ford M-Sport for first fill and aftermarket at the global level and with Castrol Ford Team Turkey in motorsports.
Together with our stakeholders, we constantly develop and renew our customer offers for our service networks in order to make a difference in oil change services. For this purpose, we actively use our “Usta Eller” digital platform, which we have designed as a training and sharing platform for our foremen at private services. In July, we initiated our service campaign, which has been developed in collaboration with Bosch Car Services as Castrol Turkey. We will continue our partnership with leading vehicle manufacturers and service providers, which are of great importance to us and grow stronger every year. Our partnerships, which expand with the services and products we develop together, will help us provide the best service to our customers.
We will continue to work in accordance with the conditions, taking into consideration the current process and prioritizing health in our business plans. We will preserve our flexible working structure by following possible changes in demands.
Finally, our work on sustainability, which has always been a priority issue for us, will continue and advance. We are working under the umbrella of bp, which aims to reach zero emissions in all its activities by 2050 or earlier. Therefore, we as Castrol will prioritize this issue in our sustainable work plans that start from our operations and extend to packaging and products in particular.
