According to the Energy Information Administration, average U.S. retail prices for regular conventional gasoline peaked at $4.05 per gallon in early July 2008. As that year ended they bottomed out at $1.59. In early March 2010, as this is written, theyre averaging around $2.72 per gallon.

When gasoline price points started to go down in late 2008, initial speculation was that driving behavior would return to the way things used to be – freewheeling and gas-guzzling. That November in Houston, for example, with prices back down around $1.79 a gallon, the headline on a local TV news story captured the hope that things would return to the way they used to be: Gasoline prices are down! Trucks and SUVs are coming back!

These reactions back in late 2008 failed to take into account that the economy was tanking. We were entering a recession (and possible depression) and these tougher economic times would affect driving behavior during 2009. When people are jobless, they do not need to commute to and from work, and with less household income recreational driving goes down too.

So despite lower gasoline prices, the economic recession contributed to consumers driving fewer miles and reevaluating how they repair and maintain their vehicles to make them last longer into the future.

Rethinking Maintenance

Oil changing behavior generally reflects other soft-part servicing, like antifreeze and coolant, automatic transmission fluids, battery maintenance, etc. During tougher economic times, vehicle maintainers look for ways to save on the cost of engine oil changes and other vehicle service needs.

The first and easiest way save on vehicle service is to drive further between oil changes – and extending drain intervals is always prevalent during tough economic times.

Drivers next reevaluate where they get their vehicles serviced. For example, those who take their vehicle to a car dealership to have the oil changed may find savings by going to a quick lube (whether national chain or independent), repair garage, tire store, or other Do-It-for-Me outlet. When times get even tougher (like throughout the 2009 economic recession), they may decide to find even greater value by changing the oil and doing other soft-part services themselves.

Further, vehicle maintainers also will reevaluate oil-change providers and maintenance outlets to obtain greater value and/or savings. Generally, a consumer who normally gets his or her vehicle serviced at a car dealership and wants to save money would go instead to a national quick-lube chain; a consumer who normally goes to a national quick-lube chain might try an independent quick lube to save a few dollars, and so on. Whether or not a consumer would skip an outlet tier depends on how much they need to save.

Now, as economic times become better, it is very likely these consumers will move back up tiers. Or they may stay at the selected economic tier to further enjoy savings realized by switching outlets – this may especially occur if a maintainer just switched between DIFM outlets. However, for those who jumped a tier and shifted from DIFM to DIY for purely economic reasons, there is a greater likelihood they will come back to DIFM servicing when they can afford it.

And as always, there remains a corps of automotive-enthusiast vehicle maintainers out there who will service their own vehicles themselves no matter what, because they feel no one could do it better and they do not trust others to work on their vehicles. Strategic Resources research indicates this hardcore group represents around 25 to 30 percent of the DIY market.

Getting Better in 2010?

Economic fundamentals continue to improve. The Dow hit 10,000 in October for the first time since September 2008; GDP increased by 3.5 percent in third-quarter 2009, and new orders for manufactured goods are rising. What has not come back strongly is employment. Last year unemployment rose to 10 percent. However, temporary employment was up in December, a potential precursor for job growth.

In its January 2010 Industry Dashboard report, automotive industry analyst R.L. Polk Co. pointed out that consumer confidence was up in December for the second month in a row, the CEO confidence index was up for the fourth consecutive quarter, and loan delinquencies were down (including auto loans).

So as recovery strengthens, how do motor oil marketers view the question whether any gain in DIY consumption will stick? I dont think there will be a large shift to DIY in the future, confided one executive at an independent blender. There is, however, a shift to more $20 oil changes. This is providing the opportunity for the DIFM person to save money, without having to shift back to changing their own motor oil. Car dealers and high-end quick lubes will have to become more competitive to keep their customers, this person suggested.

There is a myth on that – people think that the DIY market is going fade away, commented Luis Guimaraes, vice president of marketing at Shell in Houston. But when the market was at full prosperity, the shift to DIFM from DIY was marginal, meaning it was gradual. With the recent economic recession, you are seeing that gradual shift stalling, because certain consumer segments are looking to DIY for some economic relief. So the shift is ticking back upwards for DIY – while the economy is in its current recession.

There will always be shifts in the marketplace, but those shifts will be gradual in nature, he continued. This means there will always be a solid DIY market and a solid DIFM market. Our prediction is that the DIFM market will continue to be slightly bigger than DIY in volume sold, say around 60 percent DIFM to 40 percent DIY.

Why DIY Matters

Even though its a smaller slice of the market, the DIY segment carries great weight, Guimaraes emphasized. An enthusiast DIYer will always be a DIYer. These individuals tend to spend more on their vehicles, and buy more expensive motor oils like synthetics, because they invest more into their vehicles so they last longer. So on a dollar basis, the DIY market is slightly larger than DIFM, because DIYers spend more on their vehicles. Enthusiast DIYers are also trend setters for the entire market and will continue to do so.

Jayna Mull of ZXP Technologies, which blends and packages private-label lubricants and also launched its own motor oil brand in June, saw significant increases in demand last year for private-label packaged products targeted to auto parts stores and other retailers, and that packaged oil we believe gets consumed by DIYers.

As a result of the recession, those who need to save money and know how to change their own oil have shifted back to DIY, said Mull, the Highland, Texas, companys vice president of marketing. Going forward the question is, will they stay or move back? I think the shift overall is temporary in nature, because again the obstacles are too high to keep them – and by obstacles I mean there is a lack of DIY spirit; access to lower-cost DIFM oil changes exists; and there are a lot of younger vehicle maintainers that were not taught to be DIYers.

If the DIY side of the automotive aftermarket wants to keep any shift back to DIY as a result of the recession from going back to DIFM, then there has to be a renewal of the DIY spirit and it has to be cool to change your own oil.

We are seeing by our private-label sales that customers are seeking higher-quality alternatives, Mull continued. Consumers are not seeking name-brand products, but want great value buying better-quality, private-label brands. On some levels we compete with the major brands, and on others levels we do not. We do not go after the same customer demographic as major brands. Our brand and customers brands target the more price/value customer. When a customer goes into the store and our brand or our customers brand, priced lower, is on the shelf next to the major brand, we are going to get a lot of customers because we are an equivalent product meeting the same industry standards.

The DIFM Sweet Spot

Overall, these marketing officials saw movement toward DIY in 2009 – a recession-fueled shift that temporarily stalled a long-term movement away from DIY activity to DIFM servicing. When economic times get better, they expect that consumers who shifted back to DIY activity for purely economic reasons will shift back to DIFM. Still, as ZXPs Mull and Shells Guimaraes both observed, there will always be DIY enthusiasts who wont switch to DIFM.

So where will the sweet spot for DIFM activity be in 2010? If the economic recession abates this year and beyond (that is, assuming better economic times), the industry sweet spot could shift a bit toward the DIFM side of the business. And which DIFM providers would be at the center of this sweet spot?

Well, it seems that the more value-oriented DIFM outlets will initially benefit, making them the sweet spot of the industry for 2010. These outlets include any quick lube, repair garage, tire store and even car dealership that recognizes that vehicle maintainers will be looking for value when it comes to oil changes and other soft-part servicing.

Importantly, value does not necessarily mean the lowest-priced brand. A product that gives a person great value may be the product that is the most expensive. Think of full-synthetic motor oils, the most expensive in the category on a per-quart basis. A vehicle can get greater protection in extreme hot or cold conditions, greater driving performance, longer engine life, better fuel economy, and go more miles between oil changes with a full-synthetic motor oil. So its credible to the full-synthetic buyer that he or she is getting more value when purchasing the most expensive product.

This example also applies to the DIFM service experience. Oil changes and other soft-part services have to be priced competitively with all other DIFM outlets. In the past, a DIFM customer might merely have compared prices to other similar outlets. A national-chain quick-lube customer would compare prices to other national chains, for example.

Now, in 2010, drivers most likely will be comparing prices across all DIFM outlets to find the greatest possible value. So this same national-chain quick-lube customer will check prices at tire stores, repair garages and even auto dealerships for the best overall service and value.

If the economy worsens again and the preliminary fragile positive economic indicators fall back to early 2009 conditions, the down-the-tiers purchasing behavior could be repeated.