Lets imagine a U.S. motor oil market without a measurable do-it-yourself consumer segment. When private-sector passenger car and light truck maintainers needed an oil change, they all would take their vehicles to professional installers, never even thinking to change their vehicles oil themselves. When it came to which type, grade and – most important for lubricant manufacturers – brand of motor oil to use, the professional installer would decide on behalf of the customer. And the customer would not care, because this service (do-it-for-me) is the reason he or she goes to installers.
In turn, professional installers would obtain all product knowledge from their distributors and jobbers, because they would buy product only through this one, distinct channel. Motor oil manufacturers (and makers of related items like automotive chemicals and appearance products) would have to cultivate deep relationships with their distributors and jobbers, convincing them that their products are better than the competitions, because the only way to reach professional installers and the ultimate customer would be through these links. With a three-tier market structure, distributors and jobbers would be highly influential, and hold a powerful position in the automotive aftermarket.
Absent the DIY buyer, auto-parts stores like Advance, AutoZone, OReilly, Pep Boys and others would be just shells of their bricks-and-mortar selves. There would be very few retail driven auto-parts stores in existence. The majority would be more like traditional NAPA stores: primarily targeting professional installers, and with most motor oil and related product going out the back door to business accounts. There would be only modest sales out the front door to DIY consumers.
Moreover, motor oil sales through mass merchandisers like Walmart, Target and others would be essentially nonexistent. Distributors and jobbers would make sure that they maintained control of how motor oil reached the market, keeping the sales channel a strong and solid three-tier market system.
An Earlier Reality
This alternate universe is a far cry from how the market has been structured over the past 40-plus years. However, it is how the market looked in the 1950s and 1960s, and probably before then. When I was a very young man back in the late 1950s, my father would take me along to his favorite gasoline station early on a Saturday morning every couple of months. He would have his car serviced – the oil changed, fluids replaced, tires rotated, and sometimes washed and even waxed – while he and others drank coffee, ate donuts and solved the worlds problems.
My father and others during that time would never consider changing their own motor oil. His favorite gas station purchased its motor oil from a jobber, who purchased it from a distributor. Thus, the oil company hoping to cross the gas stations threshold had to first persuade the stations jobber and distributor to carry its brand and viscosity grade, and then to use their influence with the outlets manager.
As recessionary times set in during the early 1970s, vehicle maintainers sought to save money every way they could. Many began to forgo Saturday morning trips to their favorite gas stations in favor of Saturday morning trips to their own garage, to change oil themselves. Retailers like Kmart and Walmart started to take notice of this trend. They convinced motor oil manufacturers to sell to them directly rather than selling solely to distributors and jobbers.
As the U.S. DIY market grew, consumer- friendly packaging appeared. Retailers began by buying motor oil cases holding 24 quarts, with the goal of getting DIYers to stock up for their home garage inventory. One slight problem… a carton of 24 quarts is extremely heavy. It wasnt long before marketers came out with 12-quart cases, put oil change instructions on their containers, and advertised how easy it was to change ones own oil. (Valvoline even used Val the Chimp as its mascot: So easy that even a chimp can do it! ran the advertising catchphrase.)
By the early 1980s, more U.S. consumers were avid motor oil buyers and packaging was shifting to easy-pour plastic bottles. By the late 80s, DIYers were tackling two-thirds of aftermarket engine oil changes in the private-sector passenger car/light truck fleet. Then, through the 1990s and beyond, the market would tilt back again thanks to a new concept: convenient oil change outlets.
Two DIY Markets
Today, DIY has faded from its peak and professional installers such as quick lubes, tire outlets and car dealerships have retaken the lead. Yet, the DIY market maintains a solid presence and over the years two distinct, key DIYer market segments emerged: Economic DIYers and Enthusiast DIYers.
Economic DIYers are those who change the oil in their household vehicles themselves to save money. The tighter the economy pinches, the more likely they are to make this effort; when times are flush, some may turn to installers for the work. One could say about such DIYers: As recessions come and go, this DIY segment ebbs and flows.
Enthusiast DIYers will always remain DIYers because they believe no one can change my cars oil better than I can myself. Some data sources call these individuals DIY actives, but they are truly enthusiasts.
What share is DIY today? Depending on the source of ones industry data, the ratio between DIY and DIFM varies based on how these consumers are defined. Most of the industry agrees the Enthusiast DIY market segment comprises around 20 percent of private-sector passenger car/light trucks. DIFM – the share who exclusively have their oil changed by professionals – is generally proclaimed to be around 60 percent.
This leaves the Economic DIYers (or In-Between-ers who are sometimes DIY/sometimes DIFM) at 20 percent. One source of automotive aftermarket data counts all In-Between-ers as DIYers, and puts the DIY-to-DIFM ratio at 40/60. However, if Economic DIYers are apportioned evenly between the DIY and DIFM camps (a more reasonable split), the ratio is 30/70.
Consuming Trends
At a recent American Fuel & Petrochemical Manufacturers conference, Strategic Resources presented data on U.S. private- sector PC/LT motor oil consumption patterns, looking back to 2007 and ahead to 2018. The model for this projection incorporates trends such as the number of private-sector vehicles in use; the vehicles average oil system capacity; number of oil changes per vehicle per year; top-off oil demand; and factory-fill volumes.
Its also important to know where the U.S. fleet is heading. In the two years from 2007 to 2009, we saw an approximately 50 percent drop in U.S. vehicle production. Active vehicle registrations now are anticipated to return to stable, growing conditions, and should grow between 1.0 percent and 1.5 percent annually over the next five years. According to IHS/R.L. Polk, vehicle production and sales are anticipated to grow over this time as well, at about the same rates.
While the fleet may grow slightly, Strategic Resources predicts that U.S. motor oil consumption will be flat to slightly declining as a result of vehicle maintainers extending their drain intervals. In 2008, vehicle maintainers changed their oil 2.8 times on average. Last year, that figure dropped to 2.54 changes per year, due to consumers waiting longer between oil drain intervals.
Whats more, this trend is not about to reverse course. The table on page 24 projects private-sector PC/LT motor oil demand from 2007 out to 2018. As you can see, despite growth in U.S. vehicle production, sales and registrations, the downturn in motor oil demand will persist for some years.
Private-sector PC/LT motor oil volume for 2013, at an estimated 582 million gallons, was the same level seen way back in 1993. Presuming demand continues to decline as foreseen, 2018s consumption will be 561.5 million gallons, on par with the year 1992.
Now looking at 2013s total motor oil demand (582 million gallons), DIY consumption would account for 174.6 million gallons if it is presumed that DIY represents a 30 percent market share. If all Economic DIYers (or In-Between-ers) are considered to be solely DIYers, for a 40 percent share, 2013s DIY consumption would clock in at 232.8 million gallons.
Why the Big Deal?
So, what makes the U.S. DIY motor oil segment so important? A vibrant DIY market is important for aftermarket players – be they in motor oil or related products, like parts, chemicals, appearance products and so on – who want to showcase their products and provide strong user imagery to consumers in their respective categories. When they do this, strong product imagery spills over to DIYers of other categories, to DIFM consumers, and to professional installers themselves. (After all, installers are consumers too, and most likely are DIYers themselves.)
Additionally, Enthusiast DIYers are influentials, meaning others look to them for product and service recommendations. While Enthusiasts only account for roughly 20 percent of motor oil consumption, they can influence others (who seek their opinions) to use specific products and specific brands of products. This has always been appealing to manufacturers who know that the best strategy is to market to the core of the DIY segment and you will reach all those they influence.
According to IHS/R. L. Polk, drivers are now holding onto their vehicles longer than ever: 11.4 years. The data suggest that more vehicle maintainers, especially DIYers, want to keep their vehicles as long as they possibly can until the cost of maintenance outweighs the value of purchasing a replacement, or until they become fatigued with owning or leasing that vehicle. Through self-maintenance, the DIY motor oil market helps these consumers keep their vehicles as long as they can or desire.
Finally, most consumers – even DIYers – are now extending motor oil drain intervals. In qualitative focusgroup sessions, we used to always hear participants say, I change my oil every 3,000 miles no matter what. In reality, deeper questioning showed, most got around to changing their oil only after driving their vehicle another thousand miles or more beyond that avowed target
of 3,000 miles.
We now hear in group sessions, I can get more mileage out of my motor oil – 5,000 to 6,000 miles, no problem! If they get around to changing their vehicles motor oil another thousand miles or more after this more prolonged interval, they take a greater chance of the oil breaking down by the time they get around to changing it.
The DIY market can help inform and influence vehicle maintainers to change their oil promptly when it reaches the intended limit. If the future is extended drain intervals and relying on vehicles oil monitors and dashboard indicators to alert drivers when to change their oil, the DIY market can play a part in keeping negligence and bad habits in check.
Although there will continue to be more DIFM vehicle maintainers in the market than DIYers, were unlikely to see a complete shift back to the alternate reality of the 1950s and 1960s. The DIY market offers scope for motor oil and related category marketers to stay active and vibrant, and a place where they can communicate directly with consumers – starting with Enthusiasts and other influentials. As we start this new year, lets raise our glasses to the DIY market – the beating heart of the automotive aftermarket