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From: Lance (Automobile Market Observations)
Date: 13 Apr 2003
Time: 02:37:14
What many may not realize is that the auto dealerships are big time consolidators. Groups like United Auto, Lithia, Auto One, AutoNation, Sonics Automotive Group. They too are entering the industry and doing free oil changes to get customers back in. Big Ford Dealerships. And of course the "Customers For Life" Author in Dallas with his dealerships. Audi is now offering free oil changes for life and the first oil change comes with high end oil which is said to last 15K. And we see Freightliners new Van with 10K oil Change Intervals and Dealership particpation with oil changes. Well all this leads me to believe that their maybe some Wayne Hiezenga approaches to the industry. And if done properly you may see many Quick Lubes near dealerships sell to those dealerships for more advertising. In Denver down the street from one of the AutoNations is an AutoNation Car Wash and quick lube. We may see a play from that crowd in consolidation and realize they have the deep pockets to do it. Those of us near Wal-marts too could see issues and want to sell out and we may find a Dealership liking the idea. manufacturers are back to core business attitudes so do not expect them to make a play at consolidation anytime soon. But the dealership end yes, could easily happen. Also with Castrol a distant fifth in brand name sales, expect them to do some merging and this may cause some quick lubes to think about selling to neighboring competitors. In the last survey it was surprising the increases in multi-store owners of quick lubes and it does make sense if you have a winning team, why not run more. Much of the regional players may be willing to sell out their claim to fame and stake in the territory to a larger publically traded entity as car counts decrease, but also realize that even with all the competition, we are seeing more cars on the road and new car sales seem to assist both car washes and oil lube facilities. these types of auto service buisnesses track the new car sales markets for about five years. Now then GM is doing everything in their power to keep robust sales. Even allowing customers to test drive over night on most models of cars. Good idea, because it works. 0/0 still in play and leases are up too except in CT and NY with new case law where lawyers are suing title holders. But all in all we are not seeing a maxing out of the industry. All the President's talk about fuel cells seems to put it at about 10 years out. So more quick lubes and multi-store operators seems like a good play, it makes sense so do expect those who can muster the capital to make a few power plays on regionally built up owners as well as profitable, well placed single owners with fairly good offers. I can see this easily happening in PHX and Las Vegas first as they are growing so fast. LV 56 new housing tracts, 39 in Pheonix. But also in Tampa, Nashville, NW Denver Metro, Houston, Austin, Dallas, Atlanta too. We will also see if these new specs cause a little help in the consolidation process due tot he fact that some sides of this equation may get some juice from good old Uncle Sam as the EPA renders decisions on specs for decreased emissions. I do not see how the consolidation cannot continue. I read the ads in the papers around the country and the quick lubes for sale with business brokers and soem of the numbers being quoted make for a perfect scenario for consolidation, with or without Wal-Mart, Jiffy Lube going into engine rebuilding and other services or Car Dealerships giving it away for hopefully future sales and maintenance upgrades that comply with owners manuals and hopes to find other things wrong to double up on parts costs, labor rates and after market accessories in their lobbies. We will soon see what happens as 2003 bleeds into 2004 and the world keeps turing and life goes on.
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