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From: Lance (Automobile Market Observations)
Date: 08 Mar 2003
Time: 18:56:29
The fact that 28% of all fast Lubes operate some type of carwash is intriguing indeed. Of course many start as car washes first and then they have been approached with Oil Company Brand Incentives. Ie... You promise to use only our oil, advertise our banners out side and buy X-amount of oil per year and we will give you a $30,000 grant on a five to ten year contract. Or use x-amount of our oil in five years and we will give you a five year $100,000.oo loan interest free. These incentives are nothing to shake a stick at, and you can make money from a fast lube so why not advertise it, bundle services and ace your competition within the ten mile zone where 80% of your customers are drawn from. Even more interesting is that oil fast lubes draw from slightly further away than car washes typically, so you win twice. The average ticket at a typical fast lube as discussed in the Industry trade journals varies from $22.50 to $27.17 from the articles I have read, with no personal opinion on the matter myself, since I believe seasonality, car sales in the area from previous years past and competition all play a much different and more important factor, but with that said, let me continue. However realize in a perfect world the figures could legitimately be used by politicians, liars and clergy across the board. Stand alone fast lubes are said to take in on average higher ticket prices averaging $2.00 perhaps because customers are more believing when a mechanic only facility suggestively sells them wiper blades, fluid flushing or belts. Who knows, but it does stand to reason that this figure is accurate. The average cost for an oil change is $8.55 in real costs on filter, oil, etc. Carwashes with lube bays do less volume on aveerage than the stand alone Fast Lube. 38.1 cars as opposed to 42 cars? Why? space, upsell, confusing signage, too busy to want to drive in to what looks like long lines. Most lube bays can do a car in about 11 minutes, mobile is more on average especially with drive times, although you do not have the debt service of average $225,000 in building and equipment to repay. A fully operation new van such as a GMC Savannah is only $30,000 with perhaps $8,000 to $15,000 in equipment. Still efficiency is a real issue when comparing that to a building with everything ready to rip from the second the customer pops that hood. Most car washes estimate the equipment for both a lube and a car wash (laser type) to be in the neighborhood of $305,000 average. So where do we get these numbers, from magazine articles and surveys. Should we trust these numbers without doubt? No, because each market is different, every street is different, every competitor in eveery market has different levels of goodwill, referrals and reputation. Labor supply costs, building costs, planning commission add-ons, etc. Everything is different everywhere, but the numbers here are averages from those participating in surveys from various markets. So they are a decent starting point in your research and mine. Everyone needs a targt to beat, question is do you want a Wal-Mart to try to beat?
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