Is There Any Value in Using Oil Converters in Place of Specialty Oils?
A while back, I wrote about some ways operators save money by using oil converters. This was a hot topic at the most recent iFLEX show, as many operators asked about using converters in place of specialty oils or combined with them. For every advocate of converters, there is a naysayer. I am sure one could get into a pretty healthy debate with an oil company representative over the merits of using oil converters as opposed to their heavily researched, widely advertised and highly profitable specialty oils. But what is best for the oil company is not always best for the smaller operator. My goal here is to give more insight into what oil converters actually are and ways myself, and others, have successfully implemented them into our operations based on some feedback I have received from my previous article.
First, what exactly is an oil converter? Most oil converters contain a super-concentrated form of a proprietary additive package that essentially “boosts” the additive content of the oil. This is then added to some sort of carrier oil. Most oil converters I have seen treat between four and six quarts of oil, depending on the manufacturer. The important things to know as an operator are:
- What is the base oil used?
- What is the makeup of the additive package?
- How many quarts will the product convert?
So now that we know a bit about what the oil converter is, the next step is successfully implementing them into operations. Most operators I know have at least four different lines of oil with varying viscosities. This can lead to anywhere from 20-30 SKUs of motor oil. The goal with using converters is to reduce the amount of SKUs by one-third. An operator can essentially eliminate every viscosity of high-mileage oil by adding a high-mileage oil converter to their inventory. That reduces the carrying costs of additional SKUs and, in most cases, reduces the overall cost of goods sold. How much an operator can save, obviously, depends on the price differential of their conventional oil and their high mileage oil. Let’s say, for example, an operator pays $7.50 per gallon for conventional 5W-20 and $10.50 per gallon for high-mileage 5W-20. For a six-quart service that’s a difference of $5.50. Now, if the operator instead used a converter with a cost of less than $3.00 along with that conventional oil, they’d save more than $1.50 per high mileage service. This translates to a savings of nearly $300 per store, per month based on 30 cars per day at 20 percent high-mileage. The same formula would hold true for a synthetic-blend or synthetic-blend high-mileage.
Another area where converters can be used is for offering products you normally wouldn’t carry. For example, utilizing a synthetic high-mileage converter along with synthetic oil gives the operator a synthetic high-mileage product. This gives added flexibility in adding different levels of service to the menu. One word of caution, though, make sure you represent the product correctly. For example, if you are using a high-mileage converter, you don’t offer a high-mileage oil; you offer a high-mileage package. This helps ensure you are representing the oil by its proper brand and then adding a converter to complete the package.
I will end quickly with a couple myth busters. Unfortunately, there is no oil converter that can change conventional oil into synthetic oil. There is also no converter that can convert standard oil into one of the “licensed” brands of oil. Many of us wish this was possible, as it would further reduce our inventory costs, cost of goods and headaches, but that’s our reality. Feel free to contact me if you have any questions, comments or concerns. Thanks for reading!