Synthetics Come Into Their Own
By: John Frick, CITGO Petroleum Corporation

There is an old African proverb that says, “For tomorrow belongs to the people who prepare for it today.” Though similar thoughts have been uttered by countless pundits, politicians and cultures through the centuries, one thing about the future is abundantly clear - if you don’t prepare, you won’t succeed.

Keeping a keen eye on the future—including its possibilities and possible pitfalls—should be the primary mode of operation for fast lubes as we enter the next few decades, especially when it comes to how you market synthetic passenger car motor oils (PCMOs) to your customers.

Thanks to ever-changing government regulations and Original Equipment Manufacturer (OEMs) engine designs, the growth of synthetics is not about “vanity” anymore, it’s about necessity.

Though traditionally a small percentage of the total PCMO market, synthetics now make up more than five percent of the offerings currently available to fast lubes. In fact, within the synthetics product segment, the products have enjoyed growth of around eight percent for the past few years.

Driving the Demand for Synthetics
The advent of GF-4 emissions regulations in 2005 forced OEMs to introduce engines that are more efficient, reduce emissions and positively affect gas mileage. As such, the motor oils needed for that new generation of hotter-running engines required lower viscosity, higher sheer resistance and low oxidation. Most conventional oils currently on the market are formulated to meet the needs of today’s engines. But it’s the synthetics and synthetic blends that seem to be garnering the most interest from OEMs, operators and consumers alike.

In order to achieve the lower viscosity grades required for the engines, and to be considered synthetic or semi-synthetic, Group III or Group IV (PAO) base stocks must be used to make the oil. As new regulations are handed down and standards are raised (such as the much-anticipated GF-5 in 2009), it is entirely possible that even better, higher-quality base stocks will be needed to be considered acceptable by the OEMs.

Today, all major oil manufacturers feature at least one synthetic or semi-synthetic product. Currently, for an oil to claim to be synthetic or semi-synthetic, it only needs to contain Group III base stock (not PAO). It is anticipated during the coming years, as federal requirements become more stringent, the industry will see more clarification as to how these products should be manufactured. Likewise, as OEMs continue to build higher performance engines, there will be a proliferation of viscosity grades to keep up with the demand.

While many vehicle manufacturers currently suggest synthetics for use in their vehicles, it is not beyond reason to assume a day will come when synthetics will be considered the “norm” for engine oils. If you need proof, consider the 2008 launch of “small diesel” cars from Mercedes and Volkswagen. As these vehicles hit the market in coming months, along with claims that they get 40-50 mpg, car dealers and fast lube operators alike will have no choice but to offer synthetics if they hope to remain competitive.

For the past few years, most in this industry have adapted to OEM and consumer desires to achieve longer drain intervals (up to 12,000 miles in some rare cases). That trend has impacted the fast lube industry through decreased car counts. But, on the positive side, many operators have found new markets to explore because, in order to service these cars, you must offer higher-margin synthetic and synthetic-blend products on the service menu.

Profitable Opportunities with Synthetics
Regardless of engine type, the “unseen” benefits of synthetics are considerable:

• Better resistance to temperature extremes
• Low oxidation of carbons
• Low volatility and the ability to stay in grade longer than conventional oils
• A higher degree of protection for smaller, hotter running engines

These are all fantastic qualities to have in any oil, but the fact remains that 99 percent of your customer base probably doesn’t care or understand the features. All consumers (primarily) want to know is that their purchase decisions will help them protect the investment they’ve made in their automobile, and help keep their families safe. From an operator’s perspective, this not only presents a golden opportunity to position your business as a solutions provider by suggesting synthetics, but you will be able to enjoy the higher ticket average ($60-per-car, by some counts) those products deliver.

Getting your customers to view your operation as a trusted automotive service advisor requires a deliberate focus on the education and training of your staff. If you hope to up-sell customers to a more lucrative oil change with a full- or semi-synthetic product, your greeter/service writer must be able to articulate the benefits of using the oil, understand the technical aspects of the products and demonstrate your business truly cares for their safety and peace of mind.

Having an articulate, knowledgeable and friendly greeter/service writer is one of the keys to success in the fast lube industry. This person is the face on your operation and dictates, in no small part, how customers view your business. Since most consumers don’t read their automobile’s owner’s manual, it is up to the greeter/service writer to provide them with the insight and advice they’ll need to make informed decisions.

An effective greeter/service writer will be able to up-sell “fence sitters” to synthetics if they can present logical, safety- and performance-focused arguments to the customer. In order to get your employees to do that, you must make a conscious effort to continually train them on current industry trends, product information and selling techniques.

To further enhance the customer experience, a few savvy fast lube operators are now offering the widest range of synthetic motor oils possible, regardless of brand. It not only helps them become a “destination” choice for their customers’ service needs, it helps them sell against competitors that do not offer as wide of an array of product choices. Considering the apparent growth potential for the synthetic motor oil market, this could be a very sound business decision.

It’s been said that the only constant in the universe is change. Government regulations of engines will continue to evolve. OEMs will develop better and better engines to meet both federal and consumer demands. Synthetics will grow in popularity and necessity.

For the fast lube industry, the next several years are sure to see events unfold at a break-neck pace and forever change how you market yourselves to your customers. Though none of us has the power to peek into the future and tell exactly what will happen, it’s safe to say your business and customer base will look and behave a lot differently in ten years. And, as fast lube industry growth has continued to decline or demonstrated flat growth in the recent past, synthetics may just prove to be the shot in the arm you need.

Editor’s Note: John Frick is the Automotive Product Line Manager for CITGO Petroleum Corporation.

 

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