Knowledge Is Power

Next Article

Maintenance Intervals

BY JAY LITSEY, SENIOR CHANNEL MARKETING DIRECTOR, CALUMET SPECIALTY PRODUCTS

Looking for advice on how to increase car counts and make more money? The old adage that “Knowledge is Power” is familiar, but I’d like to add another one today: “Insights Drive Decisions.” What’s the di erence? Insights are what you draw from the knowledge, and power has no value if not used to drive action. Let’s share some recent fi ndings that I’ve collected over last few weeks, which can quickly be turned into actions to help you stay focused on driving new customers, current customer retention, oil changes and overall tickets.

Transition to Electric Vehicle/Used Car Fleet Opportunity

Much is written about the advent of an electric vehiclecentered future and the demise of internal combustion engines, a.k.a. your bread and butter. What’s very telling is that the current U.S. “car parc” (otherwise known as registrations) is near 288 million units. The average age of the U.S. fleet is 12.2 years old. That translates to 144 million over 12 years old, plus 144 million younger than that. With two-thirds over fi ve years old and over 75,000 miles, there’s a huge high-mileage vehicle opportunity near 193 million vehicles. Are two-thirds of your oil changes using highmargin high-mileage synthetics? Are you pairing the highmileage oil with a high-mileage fuel-system cleaner for a higher ring “rejuvenation occasion” package? Think how fi tting that could be for spring, summer, fall and winter. That’s four opportunities per year! Does your lubricant supplier o er such consumer o ers? If not, fi nd one that does to help share your promotional costs. If data estimates from Kline research prove out, it could take 20 years for half of the current registrations to leave the car parc, so you are in good shape for a while. By then, we’ll also know what you can service and maintain on hybrids and electric vehicles. You’ll have a business to keep, sell or turn over to your family members for years to come.

New Car Opportunity As Well

Consumers, new car dealers and used car dealers lament the cost of used cars these days. Cars at auction are almost double what they were just a few years ago. Even new car prices are up 7.2% versus last year, per the U.S. Bureau of Labor Statistics. Used Car Dealer Magazine recently shared that almost 62 percent of vehicles fi nanced were used. The average used car payment is now $515, up $118 from 2020. Black Book reports that the average amount fi nanced jumped from $21,362 in 2020 to $28,534 in 2022. Loan contract length has high growth in the 73-month to 84-month loan area. That’s almost seven years to pay-o a vehicle! The average used car loan is now 68 months. It’s bad for consumers building equity but a good opportunity for you to help them keep those cars going over the entire life cycle. If your lubricant supplier has incentives and consumer promotions for both newer and older vehicles, then take advantage of them. If not, it’s time to shop around!

Think Lifetime Value Of Your Customers

Black Book says that the lifetime value of a customer to an auto dealership exceeds $50,000. What is the value of that customer to you? The next time you have a moment while eating lunch or having a cup of co ee, do some quick “Jethro math” on the nearest napkin based on retaining an average customer from age 20 to 70 for 50 years of maintenance and service. Take your current average ticket value, and increase it a bit. Do the same thing for your average store visits per year. If you plan on selling more than an oil change each time, try $100 for an average ticket. For visits per year, use three. About $300 a year for 50 years is $15,000 in revenue. If you gross onethird, you keep $5,000 per customer. If you could keep a steady average of 10,000 oil changes each year from 3,300 customers for 50 years, you yield approximately $16,500,000 in potential gross profi t. Get really advanced, and plug this information into an Excel sheet. Do some “what ifs” with your assumptions to your heart’s content. Complete 100% retention is di cult, but ask your lubricant vendor for programs that can help.

The automotive aftermarket for internal combustion vehicles will be healthy for many years, and then healthy again during the final transition to hybrids and 100% battery electric vehicles. If other lubrication products and functional fluids services are not your core today, talk to your lubricant supplier soon about their other product lines and related promotions whether new cars, used cars, internal combustion, hybrid or full-battery electric. Insights drive decisions and lead to action. Embrace the change!

Jay Litsey is the Senior Channel Marketing Director for Calumet Specialty Products, which is the proud owner of the Royal Purple® and Bel-Ray® brands. He has been in aftermarket sales and marketing for more than 25 years. Jay can be contacted via james.litsey@clmt.com.