How to Start an Oil Change Business

Part 1 - How to start an Oil Change business - Background

An oil change business keeps neighbors’ cars maintained and on the road by offering regular services such as oil changes, windshield wiper replacement, and air conditioning recharging. Speedy service with a smile and competitive pricing encourages your customers to come back the next time.

Our guide is in 3 parts:

• Part 1 - How to start an Oil Change business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening an Oil Change Business?

In order to get off the ground, your largest investment will be for the equipment in your garage bays. Expect to invest at least $250,000 for a two-car facility, initial training, and media launch for your location. Multiple franchise opportunities can help you corner the local market and provide assistance for your initial growing pains.

What are the ongoing expenses for an Oil Change Business?

The equipment in the garage such as lifts and pumps must be maintained by a qualified service company. You will need to maintain a stock of a variety of oils such that you are able to service even an uncommon vehicle from time to time. Filters, gaskets, and other expendable parts must be kept in inventory as well. It will be important to have a highly trained automotive technician on the payroll that is able to properly supervise less experienced workers, who may be just starting out on their automotive careers.

Who is the target market?

Everybody who drives a car is a potential customer. The most lucrative areas are situated at the edge of urban markets, as suburban families own more vehicles and will spend money on simple services. Rural markets have fewer customers available, and some of those will want to change their own oil. Inner cities have higher costs associated with the property while customers have less cash for extras.

How does an Oil Change Business make money?

Your customers pay you a minimal fee for completing a quick oil change on their personal vehicle. Connect with local car rental agencies or delivery services to generate a larger base of repeat customers. When you expand the number of services offered, clients will return to you more often increasing profits.

How much can you charge customers?

You will want to shop your competitors to ensure your price is appropriate to your neighborhood. A simple oil change averages between $25 and $55. Most services at a quick oil change shop will cost under $100, but accessories and parts like windshield wipers provide excellent profit margins.

How much profit can an Oil Change Business make?

With many oil franchises bringing in nearly $250,000 a year, as the owner, it is possible to see a net profit of $75,000 to $80,000 a year. If your market can support the demand for additional bays, your operational income can rise dramatically above the average if your schedule is filled with appointments from open to close.

How can you make your business more profitable?

While an oil change in itself makes very little profit, the addition of extra services and parts for each customer raises the average profit margin up to 35% for services rendered per customer. Your technicians must walk the fine line between selling extra services just to make a buck vs. providing honest advice to your customers. In the long run, honesty will build a more loyal clientele that will be ready to pay for the extras.

Day-to-Day and Growth

What happens during a typical day at an Oil Change Business?

You and your employees will have a fairly regular schedule that includes:

• Maintaining the garage bays, lifts, and pumps

• Neatening up the customer waiting lounge

• Scheduling appointments such that customers never have to wait long

• Ordering supplies including oil, filters, gaskets and other automotive parts

• Basic money handling

• Process payroll

• Basic marketing tasks

• Maintaining your knowledge level for servicing all major brands of cars and new models

What are some skills and experiences that will help you build a successful Oil Change Business?

If you are going to be doing the oil changes yourself, then you should have completed basic automotive maintenance courses at your local technical university along with a couple years of experience applying your knowledge in the real world. Otherwise, as the owner you will need to:

• Understand OSHA standards to provide a safe working and customer service environment

• Have completed basic coursework in business management and administration

• Have good customer service skills

• Have the ability to train your employees in proper completion of all services offered

• Understanding of local regulations regarding disposal of hazardous wastes i.e. used oil and other fluids

• Basic marketing skills

What is the growth potential for an Oil Change Business?

Everybody needs to have their oil changed one to four times a year. If you establish a reputation for providing quick, reliable service at a competitive price, the word will spread. In a major metropolitan area, the opportunity to expand to multiple locations is very real. If you wish to take further advantage of your current location, expanding the services you provide will help to raise profits with minimal investment. In upscale neighborhoods, you may be able to offer a mobile oil change service for your wealthier clients.

What are some insider tips for jump starting an Oil Change Business?

Location, location, location. You may be able to find low rent for a fully-equipped garage in an industrial park at the edge of town, but that requires your customers spend some time to find you. When you are positioned in a busy commercial area full of strip malls and office buildings, you encourage your customers to complete this errand during lunch, or while out and about.

How and when to build a team

You may wish to have a business partner in this endeavor. One person may be focused on the mechanical part of the garage, while the other excels at marketing and maintaining good business practices. Both of you should be on board from the beginning. Hire your oil change technicians two weeks before opening to review service standards and provide training.

Part 2 - Is an Oil Change business the right fit for you?

Part 3 - Action plan to launch your Oil Change business in 90 days