ChevronTexaco Corp. and Shell Oil Products U.S. are in a tug-of-war over the biggest portion of the Texaco Xpress Lube chain. With both companies aiming to win over a majority of U.S. sites, one is bound to fall short of its goal. The competition has operators in the enviable position of being recruited, not just by the two combatants, but also by other chains.
Xpress Lubes became the subject of this contest in the wake of Chevron Corp.s merger with Texaco Inc. last October. In order to gain the U.S. Federal Trade Commissions blessing for the deal, Texaco agreed to divest its stakes in Equilon and Motiva, downstream joint ventures in the United States.
Shell in February ended up buying Texacos 50 percent share of Equilon, which included the companies combined lubricant operations for the entire country. Equilon had supplied Havoline motor oils and other products to the 720-site Xpress Lube chain. Under terms of the sale, Shell retained rights to continue supplying Havoline products until August 2003. ChevronTexacowill then have exclusive rights.
That started the clock ticking. Shell had 18 months to convince operators to convert their centers to Shell Rapid Lubes. At the same time, ChevronTexaco has beenurging them to remain in the Xpress Lube chain, meaning that it would become their supplier.
Both companies have declared their wish to capture most of the chain.
We are hoping that most Xpress Lubes operators, in particular those who have many years with the Texaco Xpress Lube Program, will see value in remaining one,and share our view that there is a strong future for the program, said VioletAnderson, North American installed motor oil manager for ChevronTexaco Global Lubricants.
Shell did not respond to requests for comments for this article. But officials told a meeting of lubricant distributors in March that the company had already contracted operators of 200 Xpress Lubes to convert to Rapid Lube, and that they expected the number to double eventually. ChevronTexaco had 100 stores under contract by June.
Operators say the competition has brought them suitors – and not just from ChevronTexaco and Shell.
It seems like Ive been contacted by just about every major chain, said Larry Ojibway, who owns an Xpress Lube in Richmond, Va. The Jiffy Lubes, the Castrols, the Citgos – they all knew what was going on — they all showed up with offers to join their team.
Shell and ChevronTexaco have offered incentives to try to attract operators. But those interviewed for this article said the packages were too similar to be deciding factors. Some said the issue boils down to a choice between two kinds of continuity – converting to Rapid Lube to maintain their current supply line, or contracting with ChevronTexaco to keep their centers image.
The most important thing to me is how the company responds to me, said Dave Bennet, owner of a Newton, N.J., center. I want to know who my rep is going to be and get a feel for how available theyre going to be. I dont want to get stuck in a situation where I cant reach the people I need to talk to, or where there are logistical problems. I do a real good volume here so I have to have product.
Most of those interviewed for this article said they either had not chosen a company or did not want to identify their choice. One, Mike Perry, said he made the mistake of indicating the direction he was leaning and paid for it.
Ive always been a fan of Havoline and their racing programs with people like Davey Allison, said Perry, who owns a center in Manassas Park, Va. So when my contract came up for renewal, I told my rep that, unless a really sweet deal came along, I was probably going to stay with Texaco. The next thing I know, Shell turned off my credit card machine at 4:45 p.m. on a Friday – no letters, no phone calls. They did notify my distributor, and told him to stop delivering to me.
Luckily, we were able to get another machine up and running after several days. But that cost me a lot of money in the meantime. So why would I want to do business with an organization like that?
Some operators speculated that Shell may feel less urgency to convert Xpress Lube centers because of its plan to buy Pennzoil-Quaker State Co. Pennzoil-Quaker State owns Jiffy Lube, by far the nations largest quick-lube chain with more than 2,100 sites. The acquisition is now under review by the Federal Trade Commission.
For ChevronTexaco, on the other hand, Xpress Lube represents the fastest route to a well-recognized, branded chain. In addition to its courting of U.S. operators,Anderson said the company is working to expand in other countries. She noted that the chain has almost 400 centers in Latin America and more than 70 in the Far East.
We have stores in Canada and are expanding into Mexico, she said. We do plan to have worldwideXpress Lube presence.