Auto Dealerships Are Entering the Oil Change Business in a Big Way

Auto Dealerships Are Entering the Oil Change Business in a Big Way. Recently I was in Boise, ID on the West End of town there is a Lithia Dealership, which has put in a huge Quick Lube, Fast Lube in front of the dealership. There is obvious reasons to do this. One of course is that the car dealership can do the warranty work, another is increased profits and a third is customer loyalty. So does it work? Well we are seeing the Grocery Stores, Wal-Mart, Sam’s Club, Costco, Kmart using this concept. So it should not surprise you that dealerships go out of their way to get people in. After all if you oil change takes 20 minutes you are apt to walk around the dealership and check out the new cars, tell friends and even wonder into the show room.Not bad and when your car is in need of repair a recent article in Auto Dealership News in June said that you are 45% more likely to bring in those major repairs if you do routine maintenance on site. And another article in OCT. 2003 in National Oil and Lube News showed that the increasing competition for quick oil change customers had increased three fold in the last three years. Anyone in the business should not be too shocked as the dealerships might even offer free oil changes to get you to buy a car in the first place or to offer as an incentive to keep you buying more cars from them in the future for other family members and the dealerships also realize as did Dallas Cadillac Auto Dealer Entrepreneur, Carl Sewel “Customer’s For Life”…511160?v=glance .This was then followed by the Dealerships in San Antonio, Houston, Los Angeles, Orlando, J-Ville, Chicago and now is going on nearly nation wide. In Garrett McKinnon’s article in NOLN National Oil and Lubrication News, he mentioned all the other add-ons such as required services at 10,000; 30,000; 50,000 miles. Think about it; alignments, brakes, tires, shocks, exhaust air-conditioning, tune-ups, etc. It makes sense. It also makes sense for us to research this for our teams to co-market and allow the dealerships to outsource using our team as their partner for those who live beyond the distance of such convenience without losing the customer’s next potential purchase. J.D. Powers study said the increase of car dealerships in their new car buyers has become 57% and much of the auto industry studies we have seen show that the drive towards regularly scheduled services has increased shop sales to the point that the profit margin in the shop is nearly equal or above that of the original sale. It is looking as if the finance dept., sales departments are being surpassed by the shop in back or in this case of Lithia Motors in Boise, ID in front. Which is where it should be if it is attaining that much volume.What does this mean for the Fast Lube Industry? Increased competition and manufacturers requiring as part of maintenance special oils which are private labeled as genuine parts for each manufacturer, thus also getting a share of those services. And do not kid yourself as G-3 specifications can clearly indicate such a migration in the next few years. Look at the special oils required by BMW and soon Chrysler? Look at the Manufacturers entering other after market add-ons. Chrysler with their own brand of Wheels and now GM getting into the business with an Announcement at the Nov. 2003 SEMA show which offended a few of the wheel companies which had always worked in close partnership.Ford on the other hand deciding to dump much of it’s non-core businesses, such as auto recycling, rent-a-car, accessory businesses and showed up at SEMA with 14 versions of it’s new F-150 to let everyone know who was the leader in light trucks for 04′. Both Ford and GM have both figured out Fast Lube Programs for their dealerships and by doing so have created a miniature franchise co-brand within a franchise which car dealerships are.GM has it’s Mr. Goodwrench service and GSP plan. This quick lube program is easily integrated into current dealerships interested in increasing revenue or new dealerships and comes in two, three or four bay versions.If you look at any Fast Lube Program or even simply a company which can put all the pieces together such as RTI Technologies and add-on a brand name to it;http://www.rtitech.comyou can see that you can easily attract the right customer to your location with good signage. But imagine a dealership with it’s own built in customers or Car Wash Franchise with it’s built in customers? .Mr. Goodwrench is also going mobile and copying the Oil Change Guys plan with it’s Mobile Service Van Program: article on this mobile service and excellent idea too. Obviously this is for the fleet customer who buys several or more vehicles. Which is our major market. Yet we find that fleet leasing departments are more than willing to trade databases with us in order to get more sales and people to talk to. The 120 Vans so far also assist in major recall issues by going on-site as to not upset the fleet customers for instance the issues with the 10 passenger vans. If you had 100 vans or so or 50 trucks with such problems and you had to schedule them all in, then either you couldn’t and would be out of safety compliance or GM did not have the room at the dealership thus everyone loses including the next fleet purchase so this is an excellent strategic move for the company and really a good service to the fleet consumer. Mopar Xpress Lube Program is only doing partly good due to bad marketing in my opinion.This is a joint program with Valvoline. Chrysler has 75% of it’s routine maintenance done by outside shops and thus is losing it’s customer base for the additional required warranty services. So they want this back, yet it is also part of the Aftermarket Industry’s 15.5 Billion in annual sales of services for automobiles? You can see the need to squeeze harder and therefore independent shops must be better than this.One problem with these add-on services for dealers is scheduling and convenience, after all if you require certain oil brands that only you can sell, then you need a shop big enough to handle the demand of the persnickety consumer who buys your brand and thus problems have occurred at Ferrari, Porsche, BMW and Jaguar in the past. This could cause lost future auto sales. One dealership gave out 14 coupons, which is one for every six months for 7 years, yet the life expectancy for a single owner in today’s American Consumer market is only 3.3 years.So the free bee car oil changes from some dealerships are more a come on than any reality. The convenience of a Fast Lube is more enticing. And for mobile oil changes even more so, since you need not drive anywhere to get the oil changed. So the battle and the chess board continues as the players re-position to make the most profits by giving the consumer what they want, when they want it and with maximum efficiency. God Bless Capitalism and the Free Market System.

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