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Texaco to boost aftersales share

Despite a dominant position in the first-fill engine oil market – Texaco supplies more than 60% of cars produced in the UK – the company has struggled to make an impact in the aftersales sector.

John Newton, manager of OEMs and global accounts in Europe, said Texaco had tended to undersell itself to franchised dealers, fast-fits and service outlets.

This was now being rectified through trade ads, dealer incentive programmes and a “determination to use our share of the car oil market, which is above 10%, to build for the future”, he said.

Texaco this month launched a workshop equipment installation and maintenance service to help dealers reduce costs from equipment failure.

Mr Newton said that penetration into the aftersales lubricants market was hampered by dealers' lack of understanding about the benefits of different oil specifications.

“We tailor our first-fill products for use in the aftermarket, but there is no guarantee that a dealer would use them, even if we supply the manufacturer,” he said.

Carmakers can recommend a brand of oil, but they cannot mandate its use. They can, though, insist on a minimum specification.

“The problem is, dealers often do not buy – or sell the benefits of – the oils that meet the carmaker's specification. But their customers will not get the durability or fuel efficiency that the car is capable of achieving,” Mr Newton said.

He urged them to trade up to the premium brand that best suited each model in order to maximise the profit margin and improve engine performance.

At least one manufacturer is looking at the types of oil its franchised dealers are using in an effort to get to grips with the problem.

Texaco supplies branded and unbranded products to the aftermarket. Unbranded oils, which often use older technology, are sold to third parties, including carmakers, who repackage the products under their own brands.

“There is a demand for cheaper oil – there are plenty of older cars on the road that do not require the latest technology,” said Mr Newton.

“It's not a question of buying the highest grade oil to get the best performance – you have to match the product to the car and sometimes this can be older technology.”

The Chevron-Texaco merger, which created the world's fourth largest listed producer of oil and natural gas, has given the company the resources to develop its aftermarket business. Texaco also took £2.6bn from the sale of its stakes in the Equilon and Motiva US gasoline businesses to Shell/Royal Dutch.

“We now have a global position, and big-company synergies, which is essential to compete,” said Mr Newton. He expected both trading names to be retained within Chevron-Texaco corporation.

Many analysts believe the merger could be the last large-scale consolidation in the oil industry. They expect European and US authorities to block further attempts due to competition issues.

The current trend for extended drain intervals, a bid by carmakers to cut running costs, conflicts with their plans to improve fuel economy.

Japanese and some European manufacturers focused on improving fuel economy and are now demanding technology that also lengthens drain intervals, while some German carmakers took the opposite route.

“It is costly to develop products for both routes, so most oil companies focused on one,” said Mr Newton. “We chose to focus on fuel economy first, which involves developing thinner oils.”

He said some German carmakers were considering 18,000-mile oil drain schedules for petrol and 30,000 for diesel, but other manufacturers wanted oil for even longer life.

“However, the longer the intervals, the potentially worst the oil will degrade. This could impact on fuel economy.”

Manufacturers are now developing on board computers that tell the driver when an oil change is required. Algorithms built into the engine management system measure a range of applications, such as revs, number of starts and temperature, to assess oil performance.

Texaco's technical centre in Ghent, Belgium, carries out extensive testing on engines and gearboxes for a number of major manufacturers including Ford.

Technicians assess the reaction to different oils and lubricants to find the optimum products. Occasionally, they may find a design fault with the engine/transmission. “Some customers discuss engine profiles and expectations of the oil before they develop the engine/transmission,” said Mr Newton. “They appreciate that you must consider oil as a component when designing the engine/ transmission.”

Future oil/lubricants developments look likely to concern environmental, health and safety issues on particulate emissions, in particular reducing phosphorus and sulphur content.

Carmakers would also like to see less ash, but this could adversely affect performance and conflict with extending drain intervals.

“New additives that are low on ash and sulphur are several years off,” Mr Newton said.

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