It started in the fall of 1973, when the Organization of Petroleum Exporting Countries placed an embargo on U.S. oil exports. The resulting gasoline shortage caused drivers to line up for blocks to buy gas.
Both consumers and automakers started looking toward less fuel-intensive vehicle designs. A Time magazine cover later that year declared the end of big engines and single-digit MPGs as the standard—“The Big Car: End of the Affair” read the cover headline.
While the motivations were different then, the shift toward fuel efficiency took hold among consumers and manufacturers. Congress passed the first corporate average fuel economy (CAFE) standards in 1975. The first target was an ambitious one for passenger cars: 18 MPG.
Synthetic engine oils were just hitting the market at that time, and they weren’t yet seen as tools for efficiency. It was more of a niche product, rarely used among the big conventional grades with high viscosity figures.
“When you look at synthetics in the past, and the weight of motor oils in the ‘80s, you’re looking at 15W-40s, 10W-40s—that was the standard in those times,” says Sean Nguyen, a scientist and technology specialist with Shell lubricants.
Engine technology and oil formulations have come a long way since then, in part because consumer demands have shifted. In recent years, new engine designs have been met with thinner synthetic oil varieties. Both work in concert with the intention to meet stricter emissions standards.
The quest for greater efficiency has persisted throughout modern vehicle history, led on the regulatory side by CAFE standards and met with industry innovation.
Lube shops have kept up with those trends, as the NOLN Operator Surveys showed a strong swing toward synthetic oil use during the 2010s. The challenge now for many operators is to service a fleet of vehicles that have more varied oil needs than ever, all while preparing for a larger shift toward lower viscosity synthetic oils.
Whether you’re educating your team or your customers, it’s important to know why the industry has reached this point and understand the change. This month, take a close look at how the oil industry is becoming more and more unconventional.
Ahead of Its Time
Bob Tewes’ father (also named Bob Tewes) was an early adopter of the quick oil change model. The first Car Care Clinic tune-up shop opened in 1977 in Mississippi, around the same time that Congress set that first CAFE standard.
As the Tewes family grew the business, there wasn’t much need to grow the variety of oil in inventory. Most vehicles required one SAE grade after oil companies developed multigrade technology.
“Back in the day, we only had one weight, and that was 15W-40,” Tewes says.
Of course, that was mostly conventional oil that his shops pumped into engines at the time. But, being ahead of its time, the business became an early adopter of synthetic oil as well.
“Believe it or not, about 30 years ago, we were the very first customer of Castrol to buy synthetic oil in bulk,” Tewes says.
It was marketed as a premium product at the time, similar to today. But conventional oil would remain dominant for years after that. Tewes says the transition was slow.
Car Care Clinic continued to grow around the Jackson, Miss., market and now has 14 locations, nine of which include full repair alongside quick lube services. Like many operators, he saw the transition toward synthetic pick up over the last decade as manufacturers renewed their commitment to efficiency.
“At the beginning, the oil companies promoted it to make better margins,” Tewes says. “That’s how it started. Then the manufacturers got involved, and here we are today.”
Making Advancements
Nguyen says that auto manufacturers made lots of engine design advancements in the ‘90s. Simultaneously, oil companies were improving their synthetic oils to meet the demands of those new engines and improve performance.
The advancements played out through the ‘00s and continues today. Carbureted fuel delivery gave way to port fuel injection, which gave way to direct injection. Variable valve timing offered greater control over fuel usage.
On the oil side, formulations went to thinner and thinner viscosities with a simple idea: less viscous resistance in the engine oil means greater efficiency. But the oil still needed to perform and protect, and as the SAE grade 0W became more common on the low end, conventional oils weren’t able to provide the necessary performance.
“We’re not talking about leaky systems and bad pistons and rings where it burns off,” Nguyen says. “We’re talking about a tight engine. So the OEMs are specifying that an oil has to have low volatility, and a conventional cannot get to that area.”
Nguyen says that around half of vehicles now have a recommended zero-weight SAE grade, and most late-model vehicles are factory-filled with synthetic. The OEM preference is clear, but where does that leave shop owners? Not all customers are convinced that synthetic oil is right for their vehicles.
Nguyen says there’s an opportunity for added margins and better service to customers.
“For the lube shops, they have to understand that it is a more profitable arena for them to go into, but it’s also giving them the assurance in the protection that they need by using a high-quality synthetic,” he says.
The data from years of NOLN Operator Survey editions show a clear trend. In 2005, the survey began by simply asking what percentage of customers purchase “synthetic lubricants.” The average was 7 percent.
The 2010 survey showed that 70 percent of customers were still buying either a conventional or blend, while just 9 percent opted for the full synthetic.
By 2015, full synthetic nearly doubled to 16 percent. In 2020, it doubled again to 32 percent of oil changes. For 2021, full synthetic oil accounts for 38.5 percent of oil changes.
Tewes says that about half of his bulk oil is synthetic nowadays, but the transition hasn’t been like the flip of a switch.
“It’s slowly moving toward full synthetic,” he says.
Tewes says that his oil distributor has been a valuable partner throughout the transition. As he looks to adjust his inventory to respond to customer needs, the distributor is there to offer advice, provide information on products, and ensure that customers have options.
“Having a partner with your distributor is probably one of the few things that I can count on one hand as being the most important,” Tewes says.
Keen operators will keep an eye on the latest vehicles to know what changes are coming when those new vehicle service plans expire. Tewes says that has helped him prepare for inventory changes.
But the larger challenge is that, while newer vehicles are strongly trending toward synthetic varieties, there are still many older vehicles on the road. And to maximize the number of vehicles and customers served, lube shops have been increasing the kinds of oils they carry.
Determining how to be the most efficient with that inventory is a big deal for any shop’s bottom line.
“Besides labor, oil is our biggest expense by far,” Tewes says.
More Options
It used to be a big milestone for a vehicle to reach 100,000 miles. No longer. It’s been a long time since Nguyen had to change a starter, for example. Parts just last longer.
“Things like that are more robust,” he says. “Hardware and seal material and technology have advanced to where it’s expected to last 200,000 to 300,000, or up to a half million miles.”
The average odometer reading on vehicles in 2019 was 22,000 miles higher than the average reading 10 years prior, according to research from Lang Marketing. From the engine design, to the parts systems, to even the tires, a vehicle is constructed to be more efficient and durable than those of past generations.
As a result, vehicle owners are able to keep their old cars for longer, especially in regions that don’t have a lot of winter road salt usage that rusts out cars and trucks.
In recent years, another phenomenon exacerbated this trend. The coronavirus led to a sharp drop in new car sales in 2019 and 2020 as people stayed inside and isolated. As areas opened back up in 2021, a jolt to international supply chains led to shortages in key components like semiconductors, which short-circuited auto production.
Those trends contributed to the oldest average vehicle age on the road at 12.1 years, which researcher IHS Markit recorded in June.
For the average lube shop, it means that inventories need to account for a late-model Toyota Camry that required 0W-16 synthetic oil, as well as the 20-year-old Buicks that still take 10W-30.
“Because of the broad age categories of the vehicles, the shop owners will have that,” Nguyen says. “And of course, meeting the specification and the right viscosity recommendation is crucial to maintain that.”
In the 2010 NOLN Operator Survey, a zero-weight oil wasn’t even in the questionnaire. By 2015, 0W-20 already made up 11 percent of oil changes. By 2020, 0W-20 was used in 22 percent of oil changes performed.
In the 2021 survey, the full variety needed to run a modern quick lube shop is on display. Around 2.5 percent of oil changes are still done with 10W-30. The ultra-low viscosity 0W-16 is rising but still small at 1.5 percent.
The SAE grades 0W-20, 5W-20, and 5W-30 together make up 79 percent of oil changes, as reported in the latest Operator Survey.
It can be tough for operators to narrow down their oil inventory to a manageable variety. Tewes says that it can be beneficial to look at your local market. His shops in higher income areas have newer vehicles, and more of a need for lower viscosity synthetic varieties. Those customers might spring for the synthetic upgrade more often as well.
In lower income areas, customers want to get the most out of their older vehicles. That may present an opportunity for a quality synthetic upgrade, but there needs to be a conventional option for the budget-minded consumer.
A Role for Conventional?
Has your shop ditched conventional?
A year ago, NOLN talked to some operators who had done just that and were able to keep customers and their revenues happy. But if you’ve learned anything from this transitional period in oil use, it’s that a one-size-fits-all approach isn’t available.
The use of conventional oil, while still relevant, took a sharp dive in recent years. Operators reported 53 percent of oil changes with conventional in 2015. In 2019, it fell to 24 percent.
The latest survey report has conventional at an even smaller share, 14 percent of oil changes performed—not insignificant, but quite a fall considering conventional oil’s ubiquity in previous decades.
“We carry it,” Tewes says of conventional oil. “It’s still a major player.”
Again, Tewes and his distributor worked closely to figure out the best possible inventory mix for his operation, and that’s going to be a factor for any operator. Your customer mix, income levels, geographic region, and more will all determine whether or not conventional is still viable in your mix.
Depending on an operator’s distributor, conventional oil might still be the best budget-conscious product to offer customers, and that’s an important segment. For others who serve lots of customers with older cars, it might make sense.
But more and more often, conventional is becoming the specialty product, rather than synthetic. For Nguyen, who has been involved in developing engine oil in a laboratory setting, building it molecule by molecule for enhanced performance, an oil based from crude oil is increasingly outdated for the latest applications.
“I think conventional will be the dinosaur of the past,” he says. “It may have some niche applications in the older, classic vehicles, but even the older vehicles now can use synthetics.”
