Making predictions about the future seems to be one of the great recurring themes in magazines, books and movies during the past 50 years. Historically, businesses have always had to remain nimble and alert because the world is ever changing, and today it seems to be changing faster than ever. 

One of the benefits of membership in organizations like Automotive Oil Change Association (AOCA) and the Specialty Equipment Manufacturers Association (SEMA) is access to the group’s information pool. Ultimately, predicting the future is a gamble because so many variables are involved. Nevertheless, information helps reduce the guesswork and often provides us with data that is often not easily come by.
 
The most recent 2006 SEMA Trends and Forecasts Quarterly Update has some good information pertaining to our quick lube market.  I’d like to share a few infobits here and extrapolate some applications.

A Wealthy Nation
Despite the endless hand wringing and negative projections from our nation’s newspapers and networks, the facts seem to support the reality that there is a lot of money out there.  Sales of new cars topped 3 million in the first six months of this year. The top 20 saw an increase in sales of more than 10 percent. New light-truck sales may be down a smidge, but are still nearly 3.6 million.

What’s more, performance boosting accessorizing is on the increase, personalizing is up, and all manner of electronic and audio enhancements continue to rise. This is not just a youth market, though.  According to the report, “Boomers control more than 50% of all discretionary income and will become more affluent as they inherit a great amount from their parents.  The older they get, the deeper their pockets. Boomers will keep spending.”  Twenty-three percent of boomer households already have four or more vehicles, all of them needing maintenance and periodic oil changes.

Retro, Hybrid and Diesel
The popular PT Cruiser, introduced in 2001, opened the door for retro styling. Ford followed with a 2005 Mustang. The online buzz indicates excitement forthcoming for two new muscle car concepts from Chevrolet and Dodge. 

Hybrid cars experienced triple digit growth in 2005 with Toyota’s Prius capturing more than half of all new registrations.  Sales will continue to grow at a fast pace percentage-wise, though by 2012 there will still be less than 800,000 sold.

The big growth area is diesel, with more than a half million diesel registrations in 2005.  According to the report, “When given a choice between a gasoline or diesel engine, consumers purchased the diesel engine option almost half the time.”  This is a trend that analysts expect will continue, driven in part by fuel prices and in part by the increased efficiency of diesel engines today.
 

What These Trends Mean For You

1. Money is less of an issue for Boomers today.  Premium quality products are more important than “cheap.”

2. Hybrids and electric cars are not going to replace vehicles that need oil changes. More than 99 percent of the vehicles on the road will need oil changes for the foreseeable future.

3. The diesel trend demands that lube operators stay current with lubrication requirements of diesel engines. Much has been written on this already, so we won’t go too deep here, but the nut of it is as follows. Because low levels of exhaust gas recirculation (EGR) technology were successfully applied in diesel engines to meet 2002 NOx (nitrous oxide) emission standards, most manufacturers have incorporated increased EGR rates of 25-35 percent in their engines to meet 2007 NOx emission standards.  Increased EGR rates mean 2007 diesel engines run hotter than their predecessors, requiring diesel oils with improved oxidation resistance to prevent thermal runaway and maintain engine protection.  The result is a new diesel oil category for 2007 vehicles called CJ-4.

Boomer affluence and the trend toward diesels both offer great opportunities for promoting synthetic engine oils. As is well known, diesel engine emissions have been an ongoing environmental concern for decades. In an effort to protect the environment, tremendous pressure has been placed on manufacturers to produce cleaner operating engines.  This puts pressure on the lubricants to protect these engines, lending itself to premium diesel oils.
 

Predictions
Making predictions about the future is a risky venture.  Some people predicted by the end of this summer astronomers would declare that we have three new planets in our solar system.  In the end, Pluto became an outcast and we only have eight.  Nevertheless, I will go out on a limb and make three pronouncements about the future.

First, the oil change industry is not going away for a long time. Most people want a measure of freedom when it comes to their auto care and dislike the idea of being held hostage by auto dealerships as the only place to take care of oil changes and other routine maintenance. It is a matter of both convenience and trust.

Second, you almost have to be blind to not notice the continued trend to quality in American consumers.  As boomer buying power continues to grow, there will be more and more wanting the best money can buy for the vehicles and toys they have accumulated. This means there will be increased demand for premium synthetic lubricants in the years ahead.

Third, though I do not picture diesels displacing gasoline engines altogether (like some of my friends) it is clear to me that people are concerned about global environmental issues and want to do something about it in their lifestyle choices.  Synthetic oils and reasonable extended drain intervals in gas and diesel engines are a straightforward way to reduce waste and produce a cleaner environment in both the air we breathe and the water we drink. 

In short, I see no evidence anywhere for a rapidly diminishing market for lubricants, and especially synthetics. This is a trend quick lube operators should be paying attention to.