When closing the deal on the vehicle she wanted, the salesperson told us that we would not have to change the oil very often because the car she picked required full synthetic motor oil and she could drive up to 10,000 miles without a drain and fill.

On the way home in the new car, I congratulated my wife for touching upon the key trends within the automotive aftermarket. Gasoline prices are changing, but if we compare the United States to countries around the world, $2.99 per gallon is a great deal. Because gasoline prices have been stable over the past several years, people are indeed driving more often; and, over the past five years, there have been more new vehicles in use.

We did not purchase a full electric or hybrid car because they only represent a small portion of all vehicles in use and the infrastructure for powering them on long trips is not yet robust. But, through original equipment manufacturer vehicle requirements and improvements in motor oils, we can extend motor oil drain intervals.

The following trend analysis is specific to the private sector passenger car and light truck market and excludes commercial vehicles and heavy-duty (Class 4 to 8) vehicles.

Gasoline Prices

In mid-July 2008, the U.S.s national average for gasoline hit $4.23 per gallon, a high that hasnt been topped since that date. When prices broke the four-dollar threshold, consumer driving behaviors began to change. News outlets were reporting on ways drivers could save money: carpooling, consolidating trips to avoid needless ones, and purchasing or leasing more fuel-efficient gasoline vehicles or alternative-powered vehicles with hybrid or full electric engines.

Then it was revealed that futures traders had been heavily buying paper barrels of crude and petroleum product futures, contributing to the run-up in fuel prices. By November 2008, the U.S. national gasoline price average fell to $1.79 per gallon. News outlets were then reporting that pickup trucks were back because gasoline prices were under $2 and would remain that way for the long term.

That same month, I told the American Fuel and Petrochemical Manufacturers that prices would rise from the $1.79 per gallon low to the mid-$3 range by 2013 and remain within that range. I was correct in that prediction. From 2011 to 2014, the U.S. national average for gasoline prices was within the $3 range. Then in 2015, gasoline prices fell to $2.40, then down to $2.12 in 2016 and back up to $2.39 per gallon in 2017. In 2018, the projected average price rose to $2.57. At the time of writing, GasBuddy (a service that tracks gasoline prices) estimated that about $364.6 billion would be spent on gasoline, up from $339.2 billion spent in 2017.

Observers assume that the economy will be stable for the next two to three years. Beyond that, it is possible that, with any recessionary pressures, gasoline prices could move up to the $3 range. Barring any unforeseen economic crises, it seems highly unlikely that gasoline prices will rise higher than the $3 range. This means that, for the foreseeable future, driving behavior will not change as a result of somewhat higher gasoline prices, because the price per gallon would have to break into the $4 or $5 range to spur any behavioral changes.

Annual Miles Driven

When gasoline prices are low, annual miles driven increase. In 2011, Americans drove 2.84 trillion miles, according to the National Transportation Statistics 2018 Report. With lower gasoline prices in 2017, annual miles driven rose to 3.198 trillion miles. Despite prices moving closer to $3 per gallon in 2018, annual miles will continue to increase to an estimated 3.292 trillion. This is because gasoline price points in the U.S. market are a good bargain, especially when compared to other world markets like Europe, South America and Japan.

Vehicles in Use

As a result of the 2008-2009 economic downturn, new vehicles in use fell to 8.3 million. The number of new private sector cars and light trucks grew steadily to 13.9 million in 2016, then declined slightly to 13.7 million in 2017. While new vehicles may have peaked for now, average vehicle age is trending up from 10.3 years in 2008 to 11.7 years in 2017. Additionally, vehicle scrappage rates are low: between 4 percent and 5 percent. What this all means is there are a lot of vehicles out there, and the number will continue to trend upward, presuming a stable economy for the foreseeable future.

Electric Vehicles

Within the automotive aftermarket, there has been a lot of buzz about the future of full electric-powered vehicles and hybrid electric and gasoline-powered vehicles. Claims have been made that we will all be driving full electric or hybrid vehicles in the very near future. This may happen in the more distant future but not in the near future in the U.S. market, as long as the economy is stable and gasoline prices remain close to their current levels. At the moment, full electric vehicles account for less than 0.25 percent, and hybrids account for 2 percent of all passenger cars in use. It seems that electric vehicles will most likely be greater in demand in other world markets than in the U.S.

Extended Drain Intervals

The days when we all changed our motor oil every 3,000 miles no matter what are gone. The trend is now to get more mileage out of each oil change: 5,000 miles, 6,000 miles, 10,000 miles or when the oil indicator light tells the owner its time for service.

This trend is facilitated by OEMs that are demanding more and more performance out of motor oils and requiring specific vehicles to use full synthetic oils based on API Group III, IV or V base stocks.

Recently, I had the oil changed in the vehicle I drive most often and asked for a conventional oil. My installer informed me that he could not do that, because my OEM requires full synthetic motor oil to be used in my vehicle. He informed me that he would install conventional oil only if I signed a waiver to show that he did not intentionally install a conventional motor oil that would void my manufacturer warranty. This influenced me to allow him to install the full synthetic oil, and I am sure that OEMs are influencing others who have their motor oil installed for them, as well as those who change their own oil.

Prediction to 2024

While the number of vehicles in use is trending upward, the result of extending oil change intervals flattens out annual motor oil consumption. From all the key market drivers stated in this article, it seems that U.S. private sector passenger car and light truck motor oil consumption will be essentially flat to 2022, then declining somewhat with any sort of recessionary pressures that may be placed onto the economy in 2023-2024.

As long as gasoline price per gallon remains a bargain, driving behavior will most likely not change. The key question is whether prices will breach the $4 per gallon tolerance threshold within the next five years, but with a stable economy and strong supply of imported and domestic crude oil, it seems unlikely that will happen.

Presuming we have more of the same stability over the next few years, those who own and drive larger, thirstier vehicles will continue to do so. The number of total private sector vehicles in use will grow as a result of more new vehicles, owners keeping their vehicles longer, and scrappage rates between 4 and 5 percent.

Despite the excitement about full electric and hybrid vehicles, they represent less than 2.5 percent of all vehicles in use, and it does not seem their impact on the U.S. market will change in the near future. Uptake will happen in other world markets first, where gasoline prices are $5 to $6 per gallon. For this particular trend, the U.S. market should not lead but follow and learn how other markets develop their infrastructure to provide necessary electrical power in a convenient and comprehensive way. That way, when the consumer demand swings toward alternative-powered vehicles, the market will be ready to meet that demand.

Finally, we have known for years that the passenger car motor oil market is flat to slightly declining. Vehicle ownership may be increasing, but oil drain intervals are being extended. The key question is: How far can they be extended? One would think there has to be an end someplace.

Before we all convert to full electric vehicles, will we see the hoods on our gasoline-powered vehicles sealed and the motor oil in the crankcase last the life of the vehicle? Or, after significant lubricant-related engine failures, will the market swing the pendulum back to more frequent oil changes and topping off between changes? This is one trend that is to be determined.

Larry Solomon is president and owner of Strategic Resources Inc., a consulting firm that specializes in the automotive aftermarket and consumer goods products. His experience includes 23 years at Valvoline. Contact him at larry@sri-ky.com or 859-619-7196.