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Multi-profit Centers

Life beyond LOF

October 11, 2010
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The fast lube industry has changed dramatically over the past 30 years, moving from a young, high-growth business to one that has matured, consolidated and changed its focus to meet growing competition and new consumer demands. As the Automotive Oil Change Association (AOCA) celebrates its 20th anniversary year, the industry we represent is considerably changed from 20 years ago.

Service review
The fast lube industry of today has an expanded focus. Over the years the cost of goods sold has increased much faster than the prices we’ve been able to charge our customers. Much of the reason has been competition amongst ourselves, the franchise repair facilities like Meineke and Firestone and, of course, the Big Box retailers.

Unable to price basic lube, oil and filter (LOF) services at full value, fast lube operators have expanded their service offerings well beyond the original industry concept, giving up some service efficiency in favor of expanded service offerings and profitability.

It is no longer simply about LOF service for most fast lubes, rather it is about providing customers with all services necessary in order to help them add life to their customers’ cars and stay within their manufacturer’s warranty.

Many fast lube companies recommend additional services to customers based upon a customer service review conducted in front of the customer’s vehicle. Prior to bringing the customer to the bay area, a technician searches their POS system for the customer’s vehicle service history.

Services are then recommended based on the vehicle manufacturer’s service intervals found in the electronic service manual. Based on this information, the employee determines which services are due.

Many lube shops recommend services by one of two variables: time or mileage. After the service review, it is the customer’s discretion whether or not they would like to get the service done at that time or during a future visit.

It is recommended to keep records of all customer services, to not only add value to customers cars, but also having an easier time keeping track vehicle service history.

While providing the customer with service information, it is important to ensure employee honesty, directness, and the ability to educate customers on provided services. Service recommendations should be based upon time and mileage not color or smell.

Consolidation wave
Not only are our services growing, but also the size of chains and franchises. There is a slowed rate of growth as major markets become saturated. The days when fast lubes were springing up faster than dandelions are over. The demand for more and more centers isn’t there, except for some expansion following the massive urban sprawl around major cities. And the costs for land and construction have gone off the wall making entry to the business much more difficult.

The focus now is on consolidation. At the outset, the cost to enter the business was relatively low, which encouraged a very high percentage of traditional “mom and pop,” single-store operators to enter the business. These intrepid pioneers frequently found considerable success providing basic auto fluid maintenance services to a motoring public that had been eager for a fast, simple solution.

Although the single store or small chain operator has certainly not been completely pushed out of the market, the emphasis has shifted to the mega-operators, those operating tens to hundreds of locations, often in multiple market areas. We’re not talking about the franchisers, who have been a major portion of our business since the beginning, we’re talking about corporate franchisees and major independent chains that have cobbled together huge numbers of locations, most often by buying up the single and small chain operators.

This puts a new face on the industry – if not to the consumer then at least to those on the inside. This isn’t the family business it was. It’s about maximizing profits through economies of scale. It’s about having many layers of management between the consumers and the business owners. It’s about a change from a neighborhood business to an often distant corporate entity. It’s about where American business in all industries is going, and the fast lube business seems to be no exception.

Fast lube future
In the future, the fast lube industry will continue to mature and evolve to meet the needs of our customers and remain competitive. On the plus side, fast lubes should be able to offer more services and lower prices as the industry consolidates under fewer and fewer owners with more buying power.

We’ll be providing these services with a better trained and better compensated workforce. But on the down side, the “community-based” business flavor will increasingly disappear as ownership becomes more separated from the actual locations and the customers.

The industry must also prepare itself for the next motor oil upgrade, the impending introduction of GF-5. One of the OEMs major goals for these newly formulated motor oils will be to make extended drain intervals a reality, while continuing to provide the engine protection that our high performance vehicles demand. Significantly extended intervals will require changes in how we do business going into the future.

The need for auto maintenance services provided in a convenient environment is not going to change for the foreseeable future. There’s a place for everyone in this industry, including the one-store and small chain operators, many of whom have found the keys to competing in this new arena.

As long as we’re cognizant of the changes going on in our industry, with our competition and with the auto industry overall, fast lubes are going to be better than ever.


Steve Christie is executive director of the Automotive Oil Change Association (AOCA). He can be reached via email at: schristie@aoca.org.

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