Hindsight in Automotive Oil Changing

It is fun to look back every so often and see if the industry analysts where correct or not. More often then not they are incorrect. Hindsight is always 20/20 as they say. The oil change industry is no exception either. In January of 2002 there were some pretty aggressive predictions made in the fast lube industry.

This was right before a major player Penske Auto Services at all the local Kmarts, took a big hit with 500 Kmart stores closing. I also see a new trend with Wal*Mart lowering prices and killing business due to the cost issue. Everyone want a good deal and an oil change from Wal-Mart is just that at $12.95. According to the bureau of statistics there is a shortage of over 60,000 auto technicians in the industry now and growing; big problem for service. No one seemed to mention the shortages leading up to 2000. Unemployment is also a significant factor because people were be cutting costs, that means going to Wal*Mart for $12.95 oil changes instead of industry averages of $26.95.

Training is also still an issue. Turn-over was an issue but may not be in the future. For the most part add-on services kept the business alive in 2001, but did not really propel it, rather more participants and increased competition hurt many owners and old owners did better than newer stores, except in expanding areas. I have to say however I am quite excited about the upgrade in that industry; no more Mickey Mouse places everything is professional now. Even in the truck oil change business Speedco is doing a great job of customer service, even though the price is a little out of line, the service makes up for it, also the quick turn-around time makes since for many drivers. I think a mobile oil change business such as the the Oil Change Guys can really build on this model on the mobile side of the industry, after all it is still relatively young and nobody gets it yet.

Isn’t it interesting to look in hindsight at the real factors that shape an industry rather than the yearly predictions of wannabe Futurists in every industry who make predictions or wishful thinking based on what they desire to get out of an industry from a vendor standpoint, operator standpoint, insurance or Lendor standpoint. Think on this, I often do.