Shell and Mobil tap into growing South American auto market

Mobil and Shell/Penzoil-Quaker State are positioning themselves to benefit from a surge in South America's car market sales over the next five years.

The latest research, from Orbis, predicts growth of almost 4.8% in South America's automotive market to 2024, despite some countries being vulnerable to political distruption and instability. Lower interest rates, particulary in Brazil, and improving consumer confidence are the key market drivers according to the report.

In the car market, regional sales increased by 7.1% in the first half to 2018 to 1.39 million unties, largely in Brazil and Argentina. Chile and Ecuador are also key for regional sales.  Whilst Brazil's automotive manufacturing output fell during recession, the country - and its automotive industry - are regaining momentum and Q1 2018 saw a 14.8% rise in automotive sales to 527,000 unit and the country accounted for 50% of all vehicle types sold across the region last year according to the research.

The growing market has encouraged activity from both Mobil and Shell.  The former, ExxonMobil's main lubricant brand, recently signed a distribution deal in Argentina with Cosan's Moove which, according to reports, is now set to exploit its exclusive manufacturing and distribution rights to re-launch the Mobil brand and boost its currently small market share across the country.  It apparently has a long way to go to catch up with market dominant YPF and Shell, however the expanding automotive market should offer encouragement and a larger playing field. 

Meanwhile Shell is turning its focus on Mexico where it has announced a joint venture with Comercial Importadora, R.L. de C.V. (CISA) to expand its lubes production capacity, enhance existing facilities and boost marketing efforts. The deal will provide exclusive licence, production and marketing rights for Penzoil-Quaker State products along with other Shell Lubricants brands.  According to CISA Board Chairman, Juan Manuel Flores: "The strategic alliance will allow us to continue offering the highest level of quality in the Mexican market, as we have done it during the last 90 years".

The deal is in line with Shell's commitment, made in 2017, to invest $1bn in the Mexican market over 10 yeafrs on all aspects of its activites.