Automotive Oil Change & Lubrication Services 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 about 35 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 about $60,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major services are oil changes (about 75 percent of sales) and other preventative maintenance. Some locations provide repair services. 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.

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 small piece of property and require low capital ...