Quick-lube Profits on the Rise


American and Canadian quick-lube centers served more customers and earned better sales and profits last year than they did in 2000, according to survey results published recently by the Automotive Oil Change Association.

Not bad given the state of the U.S. economy the past two years.

The associations 2003 Cost of Doing Business Survey, released last month, showed that sales for the average quick-lube center were 7.8 percent higher in 2002 than they were in 2000, the year of the most recent survey. Theincrease was due in part to the greaternumber of vehicles served by these centers -an average of 14,069 vehicles per shop in 2002,the highest since the survey began in 1995.

I think there are a couple factors behind the increase in sales, said Stephen Christie, executive director of the Dallas, Texas, organization, which represents 1,200 North American quick-lube owners. For one thing, prices have increased. But people are also keeping their cars longer so theyre going out of warranty, and when that happens they dont go back to the dealers so much. Theyre more likely to go to a quick-lube when their car needs service.

As was the case in every previous survey, the average ticket price per vehicle increased in 2002 to $37, up from $29 in 1995. Christie said higher prices again provide part of the explanation, but that quick-lube owners have also expanded the number of services they offer.

A lot of centers are adding transmission services, he said. You also see more offering tire rotations. Some [centers] have introduced other things. Owners offer whatever they feel comfortable with, and each one is a little different. But most are looking for more ways to serve their customers.

The average centers net profit as a percentage of net sales increased 7.1 percent in 2002. The fruits are also trickling down to employees. The average salary for a quick-lube manager rose from $28,000 to $30,000, while the average hourly wage for pit crew members climbed from $7.50 to $8.

Christie noted that the new survey is the first that the association has conducted since the end of the 1990s economic boom in the United States. He said the results suggest there may be good reasons for quick-lubes to prosper when most businesses sag.

The age of our vehicle fleet is increasing because people put off buying new cars, he said. And you also have fewer leased cars because people who need a new car take advantage of the zero percent financing that the auto companies are offering. I think it does indicate that our industry runs counter-cyclical to the overall economy.

This years results were based on responses from 134 quick-lube owners representing 403 centers in the United States and Canada.

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