Doubling down on two-wheelers and accelerating into Tier II/III markets: Shell's ambitious India bet

COVID-induced restrictions impacted almost every industry in India, including auto. But an increase in new vehicle sales, is likely to drive lubricant consumption in the auto industry during 2021-26, according to a Mordor Intelligence report. Automotive is likely to be the fastest-growing end user category in the Indian lubricant market during 2021-26, with a CAGR of over 6%.

The Indian lubricant market stood at over two billion litres in 2021, and is projected to register a CAGR of more than 5% to reach over three billion litres in 2026, the report states. The auto lubricant segment forms a big chunk of the Indian lubricant market.

Shell, a global leader in finished lubricants, has been present in the India market for over last nine decades now. With a retail presence across six states – Karnataka, Tamil Nadu, Telangana, Maharashtra, Gujarat and Assam, the brand aims to expand its network of fuel stations across the country, and also go beyond lubricants.

“India is one of the top five markets for Shell. We want to make it among the top three markets globally. We have high expectations from our India business. Our aspiration is to double the business over the next five years,” shares Amit Ghugre, automotive sales and marketing manager, Shell Lubricants India.

According to a Moody’s report, India is the third-largest finished lubricant market in the world, behind the US and China. The major players in the domestic market include Bharat Petroleum Corporation, BP Plc (Castrol), Gulf Oil International, Hindustan Petroleum Corporation and Indian Oil Corporation. Shell remains underleveraged in India. So, how does it plan to build its brand in India?

afaqs! spoke to Ghugre to understand the brand’s expansion plans in India, product portfolio, marketing initiatives, plans for Tier-II/III markets, and more.

Edited excerpts:

How important is the two-wheeler segment for Shell?

Two-wheeler is one of the biggest segments within the automotive lubricant space, as of now. Shell’s presence is limited, in terms of market share, which is close to 3% volume share. We see a huge opportunity for growth. We’re going to double down on the two-wheeler space.

We have the right product portfolio, but what is currently an opportunity for us, is awareness and distribution. That’s why we’ve decided to actually focus on the two-wheeler segment for our marketing efforts, going forward this year as well.

What are your expansion plans for the Indian market?

India is an important market for us, globally. We want to invest in the business big time.

Our products are developed with a customer-centric approach. Each product addresses a unique need and improves their engines’ life, performance and efficiency. For example, to enhance fuel economy, we launched Shell Advance Fuel Save last year.

In B2B, we’re differentiating ourselves with integrated solutions that help our customers reduce their total cost of ownership. We’re looking to grow our fluid reliability and digital solutions this year. Services like used oil testing, fluid management and on-site lubrication, are a part of our core offering today. They all help our customers to manage their operations and equipment usage.

Has the brand been able to crack Tier-II/III markets in India? What’s your approach towards these markets?

India is an important market for Shell. We want to make it among the top three markets globally. Due to digital connectivity, the Tier-II/III areas of the country are important.

In these markets, the brand is relatively underrepresented. We want to start investing in these markets. For this, we need to look after our distribution channels and brand building. These two things need to go hand in hand, so that we can get the best leverage and RoI for our efforts.

We’re more skilled in urban areas. There is a plan to slowly take it to Tier-II/III areas, with the right portfolio, distribution and marketing efforts.

Will your pricing strategy be different in Tier-II/III markets, as compared to Tier-1 areas?

As of now, there won’t be different pricing for the same SKUs. In the four-wheeler segment, we have a pretty good brand equity and reputation in urban centres.

We’re now addressing the portfolio part to enter Tier-II/III markets. So far, we didn’t have a compelling offer in a price segment, which is relevant for not only the urban centres, but also some Tier-II/III towns. We’ve just launched a product - Helix HX6 10W-40, at a competitive price point.

We’ve also launched a new grease in the market. Again, this product is competitively priced. They will allow us to enter more stores in India.

Can you talk to us about your latest campaign ‘Sapne Honge Apne’?

The brand’s recent survey with the mechanic community, revealed that most of them are driven by emotional attributes, such as investment by a brand in upgrading their workshop, upskilling them, educating their children, etc. These aspects of their sociological needs are critical for Shell to engage with them and become a part of their lives in a meaningful way.

We’ve embarked on a new mechanic community-building initiative, called ‘Sapne Honge Apne’. It takes forward Shell’s commitment of helping mechanics realise their dreams. Through the campaign, we also aim to provide a platform for mechanics to allow them to strive for success. It adds to our existing initiatives for this community.

What are some initiatives that the brand is working on? Can you brief us about the brand’s collaborations to strengthen its marketing efforts in India?

Shell has been a long-term partner for two biggest names in the industry globally. As far as our passenger car segment is concerned, we have a long-standing (oil) partnership with Italian luxury sports car manufacturer Ferrari. We do advertise and leverage this platform quite effectively, not only in India, but also outside.

From a two-wheeler point of view, we have a partnership with Italian motorcycle manufacturing company Ducati. We’re also involved in co-branding investments. The MotoGP - the bike racing event, is now taking place in September. Shell will try to use the opportunity to further drive our Ducati partnership agenda.

The brand also partnered with the movie ‘Pathaan’ as the official engine oil partner. We will continue to look for such opportunities, as we become a more aggressive industry.

Back in February, we also had our first Formula one racing event in India.

How do you approach advertising?

Post-COVID, we launched two big campaigns that were heavily advertised on television and digital.

In the lubricant space, the most important advertisement channel, will still be BTL -which is basically installed activations, promotions, branding. But we’re now also investing significantly in the ATL space. It will be a combination of PR, digital and mainstream media.