Only a couple of years ago the retail price of standard motor oil was generally about 1.19 a quart, with frequent discounts down to about .89 or so. In very short order the price rocketed up to about $2.79 or so, but I figured this was due to the price of crude oil, which also increased a lot over the same time period. But now the price of crude has come back down, with gas along with it, but the motor oil has not really moved.
OTOH, my other question is about the price you see advertised for oil changes. The price you see advertised has been about $20-$25 throughout the past few year, not going up or down, from what I can tell. I realize that these are loss leaders, designed to let the mechanics get their hands on your car so that they can find other things to fix. But I would have thought these prices would still be somewhat sensitive to the price of the major component of the service.
Oil changes have been underpriced by most shops for years, in my opinion. So now they’re just more underpriced. The mentality is “we can’t charge more than $X for an oil change because no one else charges more than that.” Very few shops put pencil to paper and actually calculate what they should charge to make a profit on it, they just price it to match what they see in the market.
I too have noticed the upsurge in motor oil prices-what was $1.20 is now$3.50. I think it has risen for two reasons:
-people now are realizing that you don’t need an oil change every 3000 miles-in most situations, 9,000 miles is OK
-the quick change places (like Iffylube) do a terrible job-and they turn a $29.00 oil change into a $300.00 fluid change episode.
Foll you manufacturer’s directions.
The motor oil rises disproportionately to gasoline prices, because producers are constantly developing more sophisticated motor oils,and they are now targeting all sorts of engines, uses and fuel economy needs. It is a very diverse and competitive market and it takes money in amounts (ads and research) that it never took before. It just is a more complex product than it was just a few years ago, and the price goes up for more than one reason (basic supply shortages). I would suspect the technological investments, R&D and advertising are the biggest causes of the price increases, and the biggest part of the whole price from square one. Since gas prices always goes up over the long haul, we see motor oil in the same light and predetermine that crude prices drive up motor oil costs. Maybe a little, but I’ll bet the price of that quart is dominated by other factors.
That seems strange. What’s unique about oil changes that makes them be priced that way?
I don’t believe there’s been that much change in the past 2-3 years or so, and plus the same change applies to store brand oil, (e.g. Wal-Mart) which are not advertised or marketed.
It’s the one automotive service that virtually everyone knows they need, that can be done cheaply, and is widely advertised so most of the public has some awareness of typical prices. Shops that use it as a loss leader are probably afraid of scaring away customers to the point that they would rather take a bigger loss on it than appear too expensive.
But the basic mentality, which amounts to letting other shops set one’s prices, is not unique to oil changes. Lots of auto repair shops are run by people who are better at fixing cars than at running a business. Many who don’t learn to price according to their own costs, rather than just mimicking prices at other shops, end up not having a business to run after a while.