Fast Lube / Auto Oil Change Service Industry Profile

The US automotive oil change and lubrication industry includes about 5,000 companies with combined annual revenue of about $5 billion. Major companies include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change, and Texaco Xpress Lube. The industry is fragmented: the 50 biggest companies generate less than 40 percent of revenue.

COMPETITIVE LANDSCAPE

Demand is driven by the amount of driving that consumers do and by new car sales. The profitability of individual companies depends on convenient location and good marketing. Large chains have an advantage in name recognition, but the operations of individual locations are similar. Small companies can compete successfully by owning favorable locations. Operations are labor-intensive: annual revenue per employee is just $60,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services are oil changes, installation of new oil filters, chassis lubrication, and preventative maintenance. Routine maintenance services like adjusting tire pressure, changing windshield wipers, replacing light bulbs, and topping off auto fluid levels are usually done in 10 minutes or less. Typically, more than 70 percent of revenue is from oil changes.

A typical location performs about 1,200 jobs per month. Most locations operate two to five bays in a drive-through building, and many use basement construction so that oil can be changed below while other services are being completed above. However, to keep capital investments low and offer quick building relocation, vehicle lifts can be used rather than basements. Locations can be built on a relatively ...