Auto Dealerships Are Entering The Oil Change Business In A Big Way
By Lance Winslow
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”

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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