Valvoline divests motor oil business

https://www.stltoday.com/lifestyles/technology/valvoline-to-…

They will keep the oil change service business and plan to expand service for electric vehicles.

Is this the sign of the times? End of the internal combustion engine could require adjustment in strategy. Get ready for all those EVs.

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Is this the sign of the times? End of the internal combustion engine could require adjustment in strategy. Get ready for all those EVs.

I think it’s more a matter of short term profit maximization.

Ever take your car into a company owned or franchise Valvoline “Instant Oil Change” place, as opposed to an oil change place that provides Valvoline? Their oil change shops are expen$ive. So expensive, I don’t know why anyone takes their car there.

When automakers switched to installing stainless steel exhaust systems, which last far longer than the mild steel systems of the 80s and earlier, Midas transitioned it’s shops to also providing oil change and brake services, which use the lifts the shops already had for exhaust work.

Valvoline oil change shops don’t have the facilities to provide other automotive services.

This could be, effectively, a liquidation of the company, in anticipation of an EV future, or a money grab. Either way, Valvoline appears to be going to an “asset-lite” model: selling off the fixed assets that actually make anything. I would expect them to also sell off the company owned oil change shops to franchisees. That would result in the Valvoline company essentially doing nothing but raking in money for use of the Valvoline brand, with minimal assets and employees.

Here’s a price comparison for oil change services. Valvoline and Jiffy Lube are the most expensive. WalMart is the beat deal.

Cheapest Oil Change: Jiffy Lube vs. Valvoline vs. Walmart and More

https://reviews.cheapism.com/valvoline-vs-jiffy-lube-vs-walm…

Steve

I have used Valvoline for oil changes without complaint. They often have discount coupons.

The time i used Walmart i found i was a quart short.

I suspect oil change service is more profitable than motor oil and ev service is the future.

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I have used Valvoline for oil changes without complaint. They often have discount coupons.

I took my old Mazda into a Valvoline Instant Oil Change, once. It was an older car, used 10w40. The store didn’t have 10w40 in it’s bulk tanks, only in bottles, so they charged me an extra $10 “can oil charge”. No other oil change place did that.

I took my old Honda in to the same Valvoline store, once. Honda uses a crush washer on the drain plug. Crush washers only crush once, need to be replaced each time the drain plug is removed. Valvoline didn’t replace the crush washer. It leaked.

The time i used Walmart i found i was a quart short.

My VW uses 6.3 quarts. If the US was on the metric system, it would be 6 liters and all would be well, but motor oil is still sold in quarts. The VW dealer would only put in 6 quarts, consistently. I would get home, check their work, and find the oil barely up to the “add” mark. I changed dealers, and the one I use now actually fills the oil properly.

I suspect oil change service is more profitable than motor oil and ev service is the future.

A particular label on a can of oil enables a higher price. Most of the major oil companies have made lube oil, as well as gas, for decades. But certain oil brands are perceived as being “premium” so bring a higher price. BP makes it’s own motor oil, but BP bought Pennzoil. Shell marketed it’s own motor oil since forever, but bought Castrol.

I don’t know what aspect of EV service could be done at the Valvoline oil change places, probably about zero. Seems servicing an EV will require, first, investment in a diagnostic computer for each store, then hiring employees more knowledgeable than the near minimum wage oil changers they have now. With regenerative braking, how fast do the friction brakes on an EV wear? I wouldn’t want to bet my company on replacing friction brakes on EVs.

This play may be a play on selling off the oil change assets, while they are still worth something, before EVs dominate the market, or it could be a money grab by management. The press release says the money from selling the motor oil production operation “will be returned to shareholders”. My suspicion is, the money will be “returned to shareholders” after management has taken a 9 figure bonus off the top. iirc, there are about 1,100 “Instant Oil Change” shops, of which some 450 are company owned. I expect them to go entirely “asset light”, selling the company stores to franchisees, as phase two. With Valvoline neither producing nor selling anything, management sits back and collects royalties for the use of the Valvoline name. This model has become a thing in recent years. You see products on store shelves variously branded as Westinghouse, Polaroid, or RCA, which have nothing to do with the company we knew by those names 40 years ago. Some investment group bought the rights to those familiar names, and sells licenses to manufactures to paste those labels on their products. I suspect that is the future of Valvoline: a couple honchos sitting in an office, cashing brand licensing checks.

Steve

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Lubrizol, now part of Berkshire Hathaway, is famous for make motor oil additive packages.

A refinery produces a suitable motor oil base stock and then often buy their additive package from Lubrizol. (Ethyl Corporation, now Albemarle, also had an additives division, not sure who has that business now, now that Albemarle became a lithium company.)

This is private label all over again. Major oil companies can have their own research and formulas and make or buy the additives. The additive package is profitable in that you are buying technology with the blend. The additive package allows many refiners to make their own motor oil.

I would not be surprised to learn that Lubrizol has both “value” and “premium” additive packages. So of course you can sell several grades of oil if you want.

They do say that a major benefit from syn lubes is their higher prices allow use of better additives.

I took my old Mazda into a Valvoline Instant Oil Change, once. It was an older car, used 10w40. The store didn’t have 10w40 in it’s bulk tanks, only in bottles, so they charged me an extra $10 “can oil charge”. No other oil change place did that.

I took my old Honda in to the same Valvoline store, once. Honda uses a crush washer on the drain plug. Crush washers only crush once, need to be replaced each time the drain plug is removed. Valvoline didn’t replace the crush washer. It leaked.

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More reasons to go EV!

Jaak