Chrysler Edges Into Fast-lube Biz


An agreement among Chrysler, Shell Lubricants and Fiats Magneti Marelli enables Chryslers dealership network to service competitive vehicles and grow the number of dealers offering fast-lube-like express services.

Magneti Marelli brings 26 product lines and more than 3,000 part numbers to Chryslers Mopar product portfolio (Mopar is Chryslers parts and service business). Chrysler said this will enable its dealerships to also service General Motors, Ford, Toyota, Honda, Nissan, Hyundai and Kia vehicles.

Shell Lubricants will provide dealer-level marketing support and supply the Mopar oil program with Mopar and Pennzoil motor oils for Chrysler Group vehicles and competitive makes. The products supplied to Chrysler dealerships will include a 5W-30 Pennzoil Platinum full synthetic officially licensed for GMs Dexos.

Currently 600 dealers, or 26 percent of the Chrysler Group dealer network, offer express lane fast-lube services. Mopar is planning to increase this to 80 percent of the dealer network by 2014. According to Chrysler, dealers who add Mopar Express Lane service to their dealerships average a 50-percent increase in their retail service business within the first six months and double their oil-change business in the first year.

Mopar President and CEO Pietro Gorlier noted that competitive vehicles currently make up 25 percent of Mopar Express Lane traffic. Our new relationship with Magneti Marelli and Shell Lubricants will allow us to further serve this growing market, he said.

Lisa Davis, president of Shell Lubricants, Americas, said Shells support to Chrysler dealers focuses on its lubricants products. Its really around our products and how best to market our products to consumers, Davis told Lube Report. Its really not about the operation of the express lubes or how to set them up – thats really their business that they deal with through a third party.

Shell owns Jiffy Lube, the largest U.S. fast lube chain. Asked if the growing Chrysler express lubes business might impact Jiffy Lube franchisees, Davis emphasized the fast lube brand remained important to Shell. Our objective very much is to grow our Jiffy Lube business, Davis said. We really see this as quite complementary – in the fact that by having Pennzoil in the Chrysler cars, recommended by Chrysler dealers, that creates awareness around the Pennzoil brand and creates pull for when those cars move out of the dealers into the independent workshops or the quick lubes. I think this all works quite nicely together to benefit our Jiffy Lube colleagues as well as our relationship with Chrysler.

Pat Wirth, president of Potomac Falls Express Lube in Potomac Falls, Va., and current president of Automotive Oil Change Association, has a unique perspective on all this as a former Jiffy Lube franchisee, whose fast lube also was formerly branded as Texaco and ExxonMobil, and is now independent. In her view, Shells move is typical of major oil companies, which are always looking for additional outlets for their products.

In my opinion, there has always been a conflict between oil companies who license or franchise quick lubes and the quick lube industry, Wirth told Lube Report. One sells a product and the other sells service. Again, market conditions predicate action. Typically the oil companies give great incentives for a business to feature their product and I would imagine this relationship is no different. Fast lube customers have never been brand driven according to every focus group study I have seen. The price for a gallon of oil from a major oil company versus a boutique oil that has identical specifications and is API approved can have a $3 to $4 differential; thats a huge difference to the bottom line.

The Mopar Express expansion indicates another effort by automotive dealers to adjust to the marketplace, she suggested. Any business that wishes to remain viable needs to assess market conditions and adjust accordingly, Wirth emphasized. Dealerships are no longer making the margins on selling cars they previously enjoyed and are now depending on their service departments to pick up the slack.

According to Wirth, adding express lane service to dealerships is nothing new and has been on-going for at least a decade. Adding an express lane to a dealership does not made a dealership a fast lube, she said. Consumers are savvy and will decide where they get the best value for their dollar.

Garrett McKinnon, editor of National Oil and Lube News, recounted how other auto makers have tried and are trying to get into the fast lube side of the business, to try to make their dealerships more profitable.

Fords still trying it with their Quick Lane program, GM tried it with their Mr. Goodwrench Quick Lube, and Toyota tried it with their Toyota Express Lube, he recalled. I think theres some overlap, with people bringing maybe a used car they bought there, back to their dealership. I dont think theyre really growing market share by penetrating other nameplates per se. They have a difficult time really convincing the public that hey, you can bring your Ford to a Chrysler dealership and get oil changed just fine too. He noted that studies indicate that once a car is out of warranty, drivers tend to migrate to the fast lube market, mainly for the convenience.

As far as the relationship with Shell, Shell is probably wanting to pick up more of the aftermarket volume from dealerships, McKinnon said. Dealers are a pretty important market to any oil company.

Shell produces Mopar brand motor oil for Chrysler. Its motor oil to their specification, so I wouldnt call it necessarily a private label, Shells Davis noted. Its a proprietary Chrysler motor oil. We provide both Mopar and Pennzoil to their dealers.

Davis confirmed that Shell Lubricants has also supplied all the factory fill lubricants for Chrysler vehicles manufactured in North America for about two years. So not only do we have Chrysler cars coming off the production line with Pennzoil in them, we also have dealers recommending Pennzoil which again is all about creating brand awareness and pull for the do-it-for-me channel in total, she said.

Related Topics

Market Topics