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Over the years, weve talked regularly about the do-it-yourself (DIY) and the installed, or do-it-for-me (DIFM) markets for oil changes. For many years DIY ruled, and in 1980 over 75 percent of U.S. oil changes were DIY.

However, in the mid-1980s a new force arose on the DIFM side – the quick lube. Before that, car dealers, service stations and garages were the only DIFM outlets, and for many drivers they were not convenient or cost effective. The quick lubes began to take over the market and saw their business grow as a new generation of vehicle owners decided that they had better things to do with their time than crawl under their passenger car or light truck to change the oil.

Over the next 10 to 15 years, the DIFM market grew rapidly until, by 2000, DIFM accounted for 55 percent of engine oil changes. Since then, DIFMs share has continued to climb. By some estimates, its now around 60 percent of the market.

When most of us in the lubricants industry think of DIFM, we immediately think of quick lubes, perhaps because of the instantly recognizable chains owned by major oil marketers like Shell, Valvoline, ExxonMobil and others. However they are not alone. DIFM also includes car dealers, independent garages, discount stores, tire sellers and service stations. Even more important, the car dealers have begun to push for more oil service business to come their way. And some believe theres a blueprint for how to proceed.

The European engine oil aftermarket is historically a DIFM marketplace. In a recent Lube Report article, writer Boris Kamchev noted that DIFM represents up to 90 percent of the market in Italy and Spain and 80 percent in Germany. The reasons for this skewing towards DIFM are varied but typically are the result of individual country requirements for annual vehicle inspections and OEM oil requirements. In addition, there is very little quick-lube infrastructure in place in Europe.

Where the North American marketplace currently relies on industry-wide oil categories such as ILSAC GF-5, European and Japanese vehicles often call for oils which meet individual auto company test requirements as well as industry standards such as those set by the automaker trade group ACEA, the Association des Constructeurs Europeens dAutomobiles. In Japan, OEM specified oils are known as Genuine oils and are specifically designed for the individual vehicle make.

One U.S. auto company, General Motors, has advocated openly for the North American market to follow the course set by Europe. In 2009, GM presented a paper at the SAE Congress (2009-1-2664) which posited the idea that each global OEM in the future could specify an engine oil for its engines alone. If that were the case, the paper pointed out, the oil-change business would go back into the dealerships and out of the quick-lube market – in part, GM noted, because no quick lube could successfully stock all the oils required by numerous OEMs in a competitive fashion.

The paper further pointed out that no single OEM is dominant in U.S. market share. That fact, coupled with the multiple viscosity grades and oils needed for servicing older vehicles, would make it prohibitive to stock the number of products required to serve the mass market if every OEM maintained separate specs. Conveniently, the OEMs dealers would have exactly the oils needed for its vehicles – and the DIFM customer would come to them.

Parts and service at car dealerships amounts to 14 percent of all dealer revenues, according to the National Automobile Dealers Associations State of the Industry Report for 2011. The table on page 6 shows how this plays out, and from these data it seems pretty apparent that car dealers would welcome additional warranty work in the form of oil changes.

General Motors made the point that the engine oil business is being driven by global pressures. Base oils are global since they are shipped worldwide, it observed, and the processes being used to make them tend to wash out crude oil differences.

For example, hydrocracked and hydrotreated API Group II base stocks, while varying somewhat, are essentially generic in nature. This is recognized in API Document 1509, the Engine Oil Licensing and Certification System, which waives nearly every engine sequence test (except the Sequence IIIGs oxidation test) when lube blenders need to read across from one Group II base stock to another in their formulations, provided certain viscometric targets are met.

GM also pointed to the general globalization of primary goals for engine oils, including fuel economy and emissions. All OEMs are facing these issues – but each OEM may have specific needs as well.

Globalization has resulted in a consolidation of oil companies as well as automobile manufacturers. This has caused a leveling of the marketplace so that one OEM doesnt dominate. The NADA report tracked the U.S. market shares of major OEMs (see the graph on page 8), which clearly shows the effect.

Shortly after presenting its 2009 paper, GM unveiled a new global engine oil specification for its light-duty vehicles, called Dexos. Two oil types carry the name, Dexos1 for gasoline fueled engines and Dexos2 for diesel engines. Dexos is designed to replace all of the various oil specifications that GM was using in its plants globally. Having standardized oils available makes it a lot easier to design, build and ship engines to whatever market GM chooses.

The problem with Dexos, according to quick-lube operators and oth-ers, is the licensing and royalty fees that GM is charging oil marketers who want to sell an approved product. European OEMs charge a licensing fee for any oil that an oil marketer wishes to add to their approval list, but none of them also charge royalties on every gallon sold.

In fact, the Dallas-based Automotive Oil Change Association (AOCA), which represents the quick-lube industry, launched its members on a letter-writing campaign to Congress, asking for a federal investigation into the whole Dexos issue. Its members believe that GMs Dexos licensing program is in violation of the Magnuson Moss Warranty Act, as well as other consumer protection and antitrust laws.

In a complaint this spring to the Federal Trade Commission, AOCA made several specific charges:

Private licensing is actually a transaction fee that reduces competition without an improvement in quality assurance.

Distribution costs related to Dexos are more expensive but the oils are less widely required, versus industry recognized and market general ILSAC GF-5 oils. This means that quick lubes cannot purchase Dexos products competitively, just as GMs 2009 SAE paper predicted. This is due to bulk oil storage, which in most quick lubes is one tank devoted to the most commonly used oil. There are about 250 million cars and light trucks in the United States, and given GMs share of sales, the actual requirement for Dexos1 oils in 2011 will likely be less than 2 percent of the motor oil market. Not enough to get at bulk rates, in other words – unless youre a GM dealer.

Warranty language is also a concern because GM states that only Dexos licensed oils can be used in 2011 model year GM vehicles, and that using something else may jeopardize the warranty. In fact, GM currently allows the use of GF-5 oils in the 2011 vehicles.

AOCA also alleged deceptive marketing on GMs part, pointing to print advertising which states that potential users should not be fooled by claims such as meets complies with or is approved for use with the Dexos specification. GM goes on to say that without the Dexos trademark and icon, no oil can meet the required performance and quality standards. Yet Valvoline has demonstrated Dexos1 performance in its non-Dexos-licensed product, so GMs marketing is misleading, AOCA asserts.

AOCA also has developed point-of-sale literature and bulletins for quick-lube operators to use when addressing customer questions about Dexos oils.

So where does all this leave us? I think it is probable that at some point North American OEMs will move forward with a European-style general specification, plus individual OEM requirements. That would mean formulators would have to create something like a basic ILSAC GF-5 oil, bolstered with OEM-specific performance criteria. Its still possible that a general industry-wide oil could be developed which has all of the credentials built in, but it would be very expensive. Best guess is that it would be at least partially synthetic and probably have some pretty exotic chemistry.

Engine oil viscometrics could get even more interesting, too, since there is a lot of interest in very-low-viscosity engine oils to capture the last bit of fuel economy. The bulk tanks in a quick lube could very well hold oils with viscosities lower than an SAE 0W-20 as well as something more like an SAE 5W-40.

In fact, I just had a brain flash: How about two bulk tanks like the old Sunoco gasoline pumps, one with a very light oil and the other with very heavy oil that could be blended at varying ratios to give just the right mix for your engine? Look for it soon!

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