Valvoline launched an engine guarantee touting coverage up to 300,000 miles last week, encouraging use of its synthetic motor oil and driving customers to its quick lube centers to change motor oil every 3,000 miles.
Enrollment is free, though customers need to register online before their car has racked up 75,000 miles, change their oil every 3,000 miles, and then keep track of purchase or service receipts as proof-of-purchase. The guarantee, announced on Valvolines web site, applies whether a customer changes his own oil or has it done at a qualified service provider. Customers need to change their motor oil with Valvoline for 18 months before they can take advantage of the coverage.
Protection is in tiers: 300,000 miles for using Valvolines full synthetic motor oils, 225,000 for using its synthetic blend oils, and 150,000 miles for using its conventional motor oils.
Valvoline had an engine warranty program before but it wasnt a tiered program, said Tom Glenn of market research and consulting firm Petroleum Trends International, Metuchen, N.J.
This new warranty is a graduated program in terms of the coverage for mileage, Glenn told Lube Report. By graduating this to 300,000 miles for synthetic, theyre going to be incentivizing and motivating customers to use synthetic. At the net, there will be more money, and more money for the quick lubes.
It becomes more interesting when you think about how successful it might be at driving the decision to use synthetics or use synthetic blends. The warrantys 3,000 mile oil change requirement is also going to drive cars into quick lubes more frequently.
Many auto manufacturers recommend motor oil changes in the 5,000 to 7,500 mile range for vehicles under normal usage, and shorter intervals for severe usage.
Glenn said that while the program is likely to drive more cars into quick lubes, maybe its not so much about driving more cars in as it is driving revenue up. And then theres the question of Ashland trying to sell Valvoline. Is this also putting a little extra shine potentially on the apple as they go through that process?
The New York Post in late April reported that Ashland began shopping its Valvoline division to pay down debt, and speculated it could fetch as much as $1 billion. Ashland has not confirmed or denied the report.
Glenn said Valvoline likely reviewed the new engine warranty program from an actuarial mindset, the way any insurance-type policy might be reviewed. Such a review would examine the likelihood of needing to pay for repairs under the engine warranty during the covered mileage. Some statistician took a long hard look at this and said, well make a lot more money on more frequent oil changes and the use of higher margin motor oils than well lose on engine warranties, he said.
According to Valvolines web site, the engine failure covered means, a) the engine will not run, solely due to lubricated engine part and component failures; and b) all other systems and components (such as cooling and exhaust systems) are working properly. All lubricated engine parts and components (cylinder heads, oil pump, pistons) are covered except for the timing chain.
If the vehicle is sold, the guarantee is not transferable. Customers who have oil changed at Valvoline Instant Oil Change centers have their on-line account automatically updated by Valvoline.
An Ashland spokesman told Lube Report yesterday that Valvoline officials were not yet available for comment because they are finalizing plans for an official announcement of the new engine guarantee program.