Car Dealers Crowd Quick Lube Market


The U.S. quick lube industry is already known as a crowded market. Now it is swelling further with the addition of a new category of participants– car dealers with stand-alone oil change centers.

A growing number of auto manufacturers have developed programs aimed at putting quick lubes on their dealers lots.Oil changesmay not be whatdealers are ultimately after -they may see that service as a hook to other business. But that doesnt change the fact that their entry means more competition for existing quick lube operators.

Chrysler recently unveiled a program designed to help its American dealers build free-standing oil change centers. That means all of the Big Three carmakers are now in the business, although Fords Fast Lane program provides a designated bay inside the dealers service center. Other dealers such as Toyota and Nissan have similar programs. In addition, Shell Oil Products US has a new program that allows dealers to develop free-standing quick lubes under its Pennzoil or Quaker State brand names.

Of course, dealers have long offered oil changes in their service centers, but observers say they didnt qualify as quick lubes. They werent quick. The trend to build free-standing centers is a bow to the concept that oil changes performed in a dedicated center will be completed faster – or at least that motorists perceive that they will be.

The reason youre seeing these programs is that car companies have recognized that, in the oil change business, its not enough to compete on price, said John Baumgartner, business development manager for global service marketing and strategy for Chrysler Corp. You have to compete on cycle time. We know that the quick lube industry over the last 20 years has redefined how to give an oil change. Theyve taken a process and built a building around it. Were following the same model so that we can compete.

Dealers are going to significant expense to adopt this model. Turnkey construction – including modular buildings, furniture, equipment, computer software, tools and training – can cost between $200,000 and $400,000 depending on size, according to Broegh Building Systems LLC, a Salisbury, N.C., firm that builds centers for dealers, as well as for quick lube franchisers. Those making the investment are after more than just oil change business.

For dealers, its more than just oil changes, Broegh Manager Jim Rydel said. They see the quick lube business as a way to draw customers and to generate traffic for the rest of their service business, as well as for sales. The ones that have them are seeing increases in parts sales, their service business, even referrals for new car sales. Thats whats driving the interest.

Although they will service other makes of vehicles, car companies say dealer quick lube programs mainly target motorists driving their own models. That means they dont consider their centers to be competing against other dealers. Its clear, however, that they are trying to draw business away from traditional quick lube operators. Opinions differ about who has the advantage in this competition. Auto manufacturers insist that motorists would rather return to where they bought their vehicle, as long as price and service time are comparable.

In general, I think most people would prefer to go to their dealer, Baumgartner said. No one else is going to know their vehicle better.

Others maintain that many drivers have a bias against letting dealers under their vehicles.

People have a love-hate relationship with dealers, said Stephen M. Christie, executive director of the Automotive Oil Change Association. The association, which is based in Dallas, Texas, has traditionally represented quick lube chain franchise owners and independent operators, but has a growing number of auto dealer members.

Some drivers dont like to go to dealers for things like oil changes because theyre afraid the mechanics are going to tell them they need to have a bunch of parts replaced, which they may or may not need. Theres a trust factor in going to an independent quick lube because they dont do that kind of work.

Related Topics

Market Topics