This is just one of the insights from National Oil & Lube News 2008 Fast Lube Operators Survey, published in the September issue of the Lubbock, Texas-based independent trade magazine.

Miles driven between oil changes at smaller fast-lube companies (companies that typically have fewer than three stores) now average 4,318 for all vehicles, up from 4,227 miles four years ago. But half of those vehicles today are equipped with oil monitors, and those monitor-equipped vehicles are going an average of 4,695 miles between oil changes. To achieve an overall fleet average of 4,318 miles, the vehicles with oil monitors are logging about 750 more miles between changes than vehicles without monitors – 16 percent further.

But the picture blurs at the big fast-lube chains (companies with an average of 270 stores). They report an average oil-change interval of 4,718 miles for all customers vehicles, and a slightly longer interval of 4,755 miles for the 46 percent of vehicles they see equipped with oil monitors. Thats a difference of only about 70 extra miles between oil changes for cars with monitors.

At fast lubes, customers arent behaving differently yet, NOLN Editor Garrett McKinnon told LubesnGreases. Theres a level of distrust of the monitors. A lot of people took the 3,000-mile message to heart, but younger drivers are more attuned to the owners manual.

The 3,000-mile oil change interval has pretty much died, he continued. Automakers are recommending longer intervals or installing oil life monitors. Most fast lubes will see vehicles when they come off warranty, so in two or three years well see that 4,300-mile [interval] edge up.

Counts Shrink, Tickets Rise

Car counts continue their 13-year decline at U.S. quick-lube facilities, which are servicing an average of 33.9 cars per day this year, down 1.5 cars per day from 2007. Meanwhile, the average ticket rose nearly 8 percent in the past year to $50.80, NOLN found.

However, that gain was offset by rising expenses. Operators faced a 19 percent hike in the average per-gallon cost of their highest volume bulk oil over the last year, and led by rising engine oil costs, the average cost of goods sold for a standard, full-service lube, oil and filter change rose more than 10 percent, from $11.55 last year to $12.75 this summer. Operators are responding by increasing prices and offering more services, McKinnon said, and more people now offer good/better/best oil changes.

The price of that standard, full-service lube, oil and filter change now averages $32.37, up just 4 percent from last year. And more than one-third of all oil changes now involve sales of synthetic blend, high-mileage, full synthetic or diesel engine oil, helping raise the average ticket.

NOLNs 2008 Fast Lube Operators Survey compiles data from 4,124 facilities in all 50 U.S. states. NOLN presents survey results in two categories: for companies operating less than 30 stores (or LT30), which represent the majority of the industry, and companies operating more than 30 stores (MT30), the large corporate chains.

In 2008, the number of stores per response in the LT30 category averaged 2.2; it averaged 269.8 stores for the MT30 category. In this article, unless otherwise noted, all data are for the LT30 category.

Corporate chains spent more to buy the land and building for the newest fast lube they own: an average of $860,125 for the MT30 group vs. $584,430 for the LT30 companies. In another measure of their better locations, the big guys report an average daily traffic count of 37,500 in front of their best store, compared to just 21,207 at the smaller companies. And the MT30 group reports an average population of 55,278 in a three-mile radius of their best store, while an average of just 29,296 people live within three miles of stores in the LT30 category.

Yearly sales per store in the LT30 group average $535,803; in the MT30 group its $626,364. And the smaller operators pay more for their motor oil.

The LT30 respondents reported paying an average of $7.68 per gallon for their highest-volume bulk oil this year, up 19 percent from 2007 and a 65 percent leap over 2004.

By comparison, the big chains said they pay an average of $7.23 per gallon.

Shells Pennzoil brand keeps its lead as the best selling motor oil, and was listed as house oil by 29 percent of the LT30 fast lubes. It was followed by Valvoline (14 percent), Castrol (12 percent), Chevrons Havoline (10 percent), ExxonMobils Mobil (9 percent), Shell (6 percent), Chevron (5 percent), Shells Quaker State (5 percent), and others (10 percent). The Mobil 1 brand dominates synthetic sales; 53 percent of the LT30 group listed it as their best seller in the category.

Of note, oil changes now account for only 69 percent of the average fast lubes gross sales, down from 75 percent just four years ago. Over recent years, NOLNs McKinnon said, the traditional fast lube has become less distinct. Theres a blending of roles. Traditional muffler and brake shops are now changing oil, and fast lubes are adding services.

When new fast lubes are built today, McKinnon continued, there are often two oil-change bays, plus a third bay for light repair work, such as brakes and suspensions.

Quick Lube Survivors

Engine oil prices arent the only prices that are rising. Hourly rates for lube technicians average $9.22, up 6 percent in just one year. Managers annual salaries, averaging $39,587, inched up just 1.5 percent in the past year, but are up 18 percent from 2004.

But its oil that puts the biggest squeeze on fast-lube operators.

There is lots of griping from operators in contracts with oil companies, said McKinnon. Those not in contracts are doing a lot of shopping around.

McKinnon described a paradigm shift in the industry, with the first-generation of operators who opened fast lubes in the 1970s and 80s – often savvy technically but without business backgrounds – now looking for exit strategies. Fully 10 percent of the LT30 operators said they plan to sell their facilities next year. The first generation was very price conscious. They were sensitive to customers reluctance to pay more.

The second generation of operators has a stronger business background, McKinnon noted. Younger operators see that consumers see the value of time savings, and theyre pricing more aggressively.

You have to have economies of scale to combat price increases. You almost have to be a multi-lube operator to survive.

While some operators want to keep car counts high and prices lower, others go for higher tickets and lower car counts, McKinnon said. Today there are lots of places to get oil changed, including Midas, Meinecke, Wal-Mart, that are very cost competitive. Operators have to decide whom they want to compete against: dealers for higher-cost customers, or Wal-Mart etc. for lower cost.

Operators doing best are pricing aggressively and going after the value proposition. Theyre getting customers in and out fast.