Valvoline Looks to Double Retail Locations as Vehicle Maintenance Surges

Valvoline is seeing strong demand for quick and convenient oil changes and other automotive services.

The preventative vehicle maintenance provider saw its system-wide same-store sales increase 11.9% during the quarter ended Dec. 31, and it’s continuing to add locations across the country, according to a Tuesday (Feb. 7) press release.

“We will continue to drive same-store sales through our proven method of quick, easy and trusted service,” Valvoline CEO Sam Mitchell said Tuesday during the company’s quarterly earnings call. “This allows us to continue taking market share and build on our strong customer loyalty.”

The company attributed this growth to both a larger number of vehicles being serviced and a wider range of services being delivered beyond oil changes.

“Our simple growth algorithm of driving same-store sales plus adding units and incremental services continues to deliver,” Mitchell said during the call. “We have an impressive long-term track record of driving same-store sales performance and unit growth, and our Q1 results are in line with that continued growth trajectory.”

This growth comes as several trends in the U.S. auto fleet are boosting demand for automotive service. There are more vehicles on the road, fewer are being scrapped and their average age is increasing.

S&P Global Mobility reported in May that the vehicle fleet had increased by 3.5 million over the prior year to 283 million, the percentage of vehicles being scrapped was the lowest in two decades and the average age of vehicles rose by two months to 12.2 years.

At the same time, the number of vehicle miles traveled returned to pre-pandemic levels, S&P Global Mobility said.

As PYMNTS reported in May, despite the economic headwinds of inflation and fuel prices, the automotive service industry is being driven by underlying demand and a shift of consumer spending from discretionary purchases to necessities.

Valvoline is all-in on automotive service. It’s selling its global lubricants business to focus on retail automotive service. Valvoline expects to complete the sale during the first half of calendar year 2023, management said during the call.

The firm also aims to increase its number of company-owned and franchised locations from the current 1,746 to more than 3,500. The company added 31 new locations in the first quarter of fiscal year 2023 and plans to add between 130 and 160 during the full fiscal year, according to a presentation released Tuesday.

Looking ahead, Valvoline reiterated its fiscal year 2023 guidance of 8% to 12% growth in system-wide same-store sales, according to the press release.

“With the anticipated closing of the sale of the Global Products business, we are excited to focus on driving growth and increasing value of the new Valvoline,” Mitchell said in the release. “The long-term model of increasing same-store sales; expanding our store network, including an increased focus on accelerating franchise growth; and developing new services for an evolving car parc will allow us to grow, while consistently returning value to shareholders through an enhanced capital structure.”

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.