Quick Lube History: 1989 – QUICK OIL-CHANGE INDUSTRY DRAWS A CROWD – Chicago Tribune

A Sunday afternoon test: Would you rather take a nap, go fishing, play tennis or change the oil in your car?

Quick oil-change shops, which are sprouting all over, are betting they have the answer: For $20 to $25 and a few minutes of your time, they will take care of the chore.

The combined task of changing the oil and oil filter and lubricating the chassis, the most basic auto-maintenance procedure, has become such a hot business that it`s attracting the big boys.

Even though quick-change shops have a small share of the market-most oil changes still are done by car owners-it is the only segment of the industry that is growing.

Ford Motor Co., which announced in April that it is entering the quick-change business, hopes that 10 percent of its dealers will offer the service by the end of the year. General Motors Corp. is testing the idea at 100 dealerships. Avis Inc. is opening quick-lube centers. And Exxon Corp. and Texaco Inc. are looking at quick-change shops.

For the nation`s largest motor-oil companies, the quick-change business is an important weapon in the battle for market share. Pennzoil Co.`s early links to quick-lube companies, observers say, have helped make it the leader of the $2 billion motor oil industry.

When gas stations began replacing service bays with racks of beer, milk and snacks, the quick oil-change industry was born.

In 1972, there were 226,500 gas stations in the United States, according to the Urban Land Institute. Today, there are 126,000, and only 90,000 of them offer service.

Baltimore-based Jiffy Lube International Inc. moved quickly to fill the gap and has become the industry leader. With 1,036 stores, it is three times larger than the second-largest chain, Minit Lube, based in Salt Lake City.

Jiffy Lube`s national expansion, however, has been sputtering. It recently was forced to take a one-time charge of $39 million to restructure some of its franchises. It bought out poor performers in Texas and

Philadelphia and signed up new franchisees, said Charles Lucier, an analyst with the Cleveland-based Booz, Allen & Hamilton Inc.

In the face of looming competition from Ford, General Motors and the others, Lucier said Jiffy Lube must prove it can run the far-flung network of franchises. ”A lot of these are transition questions,” he said.

Jiffy Lube recently raised $18 million by selling the land under some franchises to Pennzoil. The deal was another example of their close relationship. Pennzoil provides bulk oil to all of the Jiffy Lube outlets.

”Before the quick-lube industry, they were No. 2, behind Quaker State,” said Joan Stephens, Jiffy Lube spokeswoman.

Pennzoil now controls about 20 percent of the motor oil market, said Larry Moore, an analyst with NPD Automotive Data in Houston. Other leading brands are Quaker State, Valvoline, Castrol and Texaco`s Havoline oil.

Quaker State Oil Refining Corp. recognized the marketing muscle of the quick-change business in 1986 when it bought Minit Lube, the No. 2 chain.

But the quick oil-change business is just one piece in the segmentation of the $100 billion auto care and product industry. Specialty muffler, brake, tuneup, transmission and oil-change shops dot suburban arteries. Grouping these specialists into auto malls has become a significant market for commercial real estate developers.

The Urban Land Institute, based in Washington, says more than 200 of these auto malls have sprung up in the Sun Belt.

In South Florida, seven Jiffy Lubes are located next to other automotive specialists.

”It creates a market for all of a car, that`s about $1,400 in reveus,”

said John Centera, director nue a day. of operations for South Florida

The neighborhood repair shop, as a result, has had to find new Lubes, owner of 20 Jiffy Lube ways to survive. centers. He said his stores average

Some will do work only under about 60 cars per day. At $22.95 the hood, rejecting tire repair or exhaust work. They are squeezed all around: by the high-cost of new technology, by the specialists and by the automakers themselves, whose warranties keep car buyers coming back to the dealer.

”The automotive end is more specialized. That is why the dealers are getting into it. They have lost business,” said Peter Goebel, owner of two McQuik`s oil-change centers in Broward County, Fla.

New-car dealers have suffered in their relationships with consumers because it usually takes an appointment to get in, and then there can be a long wait.

”The dealers are so large, they (customers) can grow old waiting for their cars to come back,” said Paul Eckert, director of operations of Sparks Tune-Up, a Downers Grove, Ill.-based chain of repair shops.

Ford and General Motors acknowledge their hopes that quick-change service will improve their image.

”I`ve heard the horror stories,” said General Motors spokesman Bob Tripolsky. ”That is part of the plan, to enhance customer satisfaction and brand loyalty.”

Ford executive John Kerekanich, in announcing the quick-change plan, said: ”Our market research shows that dealer service gets high marks for technical competence, but it is perceived as not being fast and convenient.

”We feel that the fast-lube outlets not only will help change the image, but they will actually increase the productivity of the dealer service area.” So far, only 20 of Ford`s 5,600 dealers nationwide are offering the service. But Ford hopes to have 500 dealers on board by the end of the year and 2,000 by 1992.

User Review
5 (1 vote)

Leave a Reply