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Built to Last?

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ExxonMobil Automotive Marketing Manager Brad Onofrio calls last years lubricants market volatile, with competitors in the trenches – a description that would prompt his counterparts around the industry to nod their heads in agreement.

In hindsight 2005 was indeed a bruiser, punctuated by spiraling prices for motor oils, painful supply disruptions after Hurricanes Katrina and Rita, and widespread consumer dissatisfaction with oil companies. In short, not the year you might pick to unveil a new line of engine oils, as Mobil did.

Still, Onofrio expressed satisfaction with the new products performance. While our research indicates that it takes at least two years to make a final judgment on the success of a new product line, Onofrio told LubesnGreases recently, after more than one year were pleased with the progress of our new high endurance oil, particularly in the premium-end semi- and full-synthetic oils.

Onofrio was referring to his companys expanded line of Mobil motor oils, launched in early 2005 after two years of intensive and highly secret technical work. The products guarantee engine protection for distances ranging from 5,000 to 15,000 miles (depending on the product) and, with few exceptions, this promise covers all driving regimes – including what the company calls typical stop-and-go driving.

ExxonMobil said it had brought to the market a new product category – high endurance engine oils – and clarity to counter what it called the mixed messages from OEMs and installers. Has it?

Tough Year to Launch

Given the scope of the market last year, it was difficult to launch a new product, replied Ann White, the Houston-based director of The NPD Group – Automotive, a market data firm which tracks the automotive aftermarket. There were lots of base oil price increases and we saw a significant increase in motor oil prices, along with a decline in consumption. Driving habits faltered, possibly as a response to high gasoline prices and Hurricanes Katrina and Rita, which played havoc with supply channels.

2005 was unusual; consumers had more money, but because of high gasoline prices, miles driven did not grow as historically would have been expected, White pointed out. Overall, miles driven posted the smallest increase since 1980, when there was an actual decrease. The end result: Motor oil sales overall were down last year, particularly from the end of the third quarter. Fourth-quarter 2005 was the lowest-performing motor oil quarter weve seen in years in the auto parts channel.

NPD tracks retail auto parts scanner data on conventional motor oil, plus three categories of nonconventional products: oils for high-mileage engines, synthetic blends, and full synthetics. Nonconventionals enjoy premium prices, and have been gaining ground on their conventional brethren in the past few years, White said. Nonconventional oils now account for 18 percent of all quart sales in the auto parts channel. On a dollar basis, though, their higher cost means they claim 30 cents of every motor oil dollar spent in the auto parts channel.

Its tricky to pinpoint how well the Mobil high endurance oils are doing after just one year, she continued. Besides other difficulties, the products were facing off against two new competitors – Pennzoil Platinum full synthetic oil, and Quaker States flashy new Q brand. There was a lot of activity, and with the noise of everything else going on, its too soon to say how well the Mobil products are doing, White stated.

Are high endurance oils a new product category? Not yet, White replied. A category needs to have more than just one contender. She recalled that when Valvoline introduced MaxLife engine oil, there was nothing to compare it to. So NPD grouped it with synthetic blends for the first year. Then, as other brands began to elbow onto the field, a breakout category was established.

For now, Mobil Clean 7500 is grouped in the synthetic blend category, and Mobil 1 Extended Performance in the full synthetic segment. Not a class of their own.

Clutter Cutter

When the new line was launched last year, the company stated that its goal was to cut the clutter, confusion and different messages in the marketplace. Onofrio recently gave an update: There are still confusing messages in the marketplace, but our message is clarifying for the consumer and is resonating with them and we expect continuing strengthening of this effect.

The companys prior-to-launch research indicated that 90 percent of motorists would use a product that protects for 7,500 miles. However, seemingly contradictory research indicated that the vast majority of people were not inclined to change their oil drain interval habits. Nevertheless, both the companys research and its program experience after more than a year indicated that while oil drain interval habits might not change drastically, consumers were attracted to the concept of guaranteed benefits. It offered them, Onofrio indicated, a sense of understanding and security.

High endurance oils, with the guarantee of a stated number of miles of protection, Onofrio said, have contributed to the growing recognition that oil can perform well beyond the 3,000-mile message that is still often found in the marketplace.

Company spokesman Don Turk added, When we introduced this line in early 2005, customers were already going well beyond 3,000 miles. The average drain interval length was about 4,300 miles, and the drain interval has increased since then. The guarantee adds a safety factor, peace of mind for the consumer. This concept was an important feature of the program.

Four Contenders

Four products make up ExxonMobils high endurance line: two based on conventional mineral oils, one a synthetic blend, and one full-synthetic polyalphaolefin based product.

Mobil Clean 5000 and Mobil High Mileage oils both use mineral oil base stocks. The high mileage product joins a now-crowded field which includes Valvolines pioneering MaxLife engine oil; MaxLife established the high mileage category over five years ago and continues to dominate it. Like its rivals, Mobil High Mileage is formulated for engines with over 75,000 miles of service, but it does stand apart in being the only one to guarantee 5,000 miles of protection.

Mobil Clean 7,500, a synthetic blend, guarantees protection for 7,500 miles under typical driving conditions.

Mobil 1 Extended Performance tops off the year-old quartet. Mobil 1 is the best-known synthetic motor oil brand worldwide, and the company built on that recognition by formulating into the product 50 percent more of its proprietary SuperSyn performance additive package. It then heaped on a 15,000-mile guarantee.

Guaranteed protection at such lengths is not offered by any company other than the independent Amsoil Inc., in Superior, Wis. Major oil companies tend to shy away from mileage recommendations; their labels mostly advise drivers to follow the directions in your vehicles manual.

All four new Mobil products labels say they are appropriate at the intervals stated for all typical driving conditions. The only exceptions are racing and commercial use; frequent towing or hauling; extremely dusty or dirty conditions; or excessive idling. The Mobil 1 website, however, cautions consumers to comply with any dashboard alert if their vehicle is equipped with an oil life monitor, and to follow the drain intervals in their owners manuals if their car is still under warranty.

The Sophomore Year

The second year of the high endurance oil program may not decide the ultimate outcome of this initiative. The company appears to be still in the market impact and evaluation stage.

As of now, however, the companys support for high endurance oils is explicit. We are going to aggressively support these products in both the retail and installed marketplace through advertising, retail and sales support, Onofrio stated. The level of this support for 2006? Onofrio will only say, We will continue to advertise at a level that is commensurate with our competitors and effective for the product line.

Onofrio noted that in the fourth quarter of 2005 the company had introduced an aggressive program to encourage sales of the product at its branded quick-lube outlets, Mobil 1 Lube Express. We will continue with that effort through 2006 and will have a series of specific promotions to the installed market throughout the rest of the year. He said this effort is paying off in positive resonance of the line with installers. The company added 97 outlets to the chain in 2005, most of them in Texas and Florida, for a total of 238 U.S. locations operating at the end of 2005.

The long-term trend of oil changes being done by Do-It-For-Me outlets at the expense of Do-It-Yourselfers shows no sign of slowing, much less reversing. Steve Christie, executive director of the Dallas-based Automotive Oil Change Association, notes, Recent reports suggest that DIFM outlets are probably doing in excess of 60 percent of the oil changes in the country. Thats up from a 55/45 split just a couple of years ago. Arent installers reluctant to offer oils that threaten to reduce customer visits and cut daily car counts in their service bays? We had originally expected some marketplace resistance, and that happened early on but has not continued, according to Tom Olszewski, ExxonMobils North American technical adviser. As far as reaction from OEMs, prior to the launch we had talked to them, and we continue to have regular discussions with them. We have not heard any different feedback from what we originally heard.

When the lineup of new oils was introduced last year, not all of them met the fuel-economy requirements demanded by automakers for engine oils. But by spring 2006 that hurdle was overcome and, Olszewski reported, All high endurance products, including Mobil 1 Extended Performance, have been API licensed, with appropriate viscosity grades able to display the Starburst logo. The companys next step, he indicated, may be to explore other viscosity grades that will meet the needs of our customers. He pointed out, We recently rolled out Mobil 1 Turbo Diesel Truck SAE 5W-40 and Mobil 1 in the SAE 0W-20 grade.

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