The companies claimed that the venture will be the first of its kind in China. Their plan, first announced in October 2003, calls for construction of 600 outlets within 10 years.
Automotive service provider Shanghai Automotive Industry Sales Corp., a subsidiary of SAGC, already operates businesses that lease automobiles and sell car accessories, as well as an auto club, all under the Anji brand name. SAISC has a 50 percent stake in the quick lube joint venture – named Anji Jiffy Lube Automotive Services Co. – with Shell China Holdings B.V. and Shell (China) Ltd. holding additional stakes of 40 percent and 10 percent, respectively.
Officials said they see a big opportunity in China, which has a rapidly growing fleet of automobiles, but which does not yet have quick lubes. China now has 23 million vehicles on its roads, and sales of new vehicles have been growing at high double-digit rates – fast enough to have made it the third-largest market in the world in terms of sales. As a result, the automotive products after-market is also growing fast.
The strength of this partnership lies in the experience that each party brings to the joint venture, Shell Lubricants Chief Executive Officer David Pirret said. SAISC provides a high profile and expertise in the Chinese motoring market, while we offer premium quality Shell Helix lubricants and Jiffy Lube, the leading brand in automotive preventive maintenance services in North America, as well as the technology and experience of running a successful fast lubes operation for 25 years. This partnership enables us to continue our downstream growth in the service industry and expand into a brand new market.
The companies said they plan during the next year to build approximately 10 pilot locations in Shanghai and then to expand to Beijing and other parts of China. Outlets will be modeled on the Jiffy Lube concept, offering oil changes and other preventive maintenance services to customers while they wait.
Acquired by Shell as part of its 2002 purchase of Pennzoil-Quaker State, Jiffy Lube is the market leader in North America, with more than 2,200 quick lube locations claiming to service more than 80,000 vehicles per day.
Shell officials said the 2003 announcement signaled an agreement by Shell and SAGC to try to develop the partnership, whereas this weeks announcement was pegged to the creation of the joint venture company. The partners have invested $23 million in the venture.