National Oil & Lube News

March 2017

Digital issues of National Oil & Lube News, the trade magazine for the preventive maintenance industry

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Page 29 of 67

30 NOLN | " our cities, public transportation is virtually non-existent, so people truly rely on their cars." e Kingdom, which saw its domestic oil production increase by more than 3 percent to record-highs in 2015, has a high standard of living and a per capita income of more than $55,000. Its people generally enjoy a decent standard of living, due in a large part to gov- ernment programs that were designed to min- imize poverty, and the cost of living in Saudi Arabia is about 36 percent lower than that of the United States. Its citizens, thus, benefit from what Shaikh described to be a combina- tion of inexpensive cars and cheap oil. Gasoline is still less than $0.76 a gallon, and that was af- ter a price hike of nearly 50 percent at the be- ginning of last year made in an attempt by the government to reduce the fiscal deficit by the removal of some subsidies. "Every household has a car, and there are currently more than 8.5 million cars on the road today," Shaikh added. With 31.6 percent of the market share, the nation's top automotive brand is Toyota, and Japanese vehicles are very common. It is worth noting that Petromin has also become only the second authorized dealer for Nissan vehicles in Saudi Arabia. Currently, Nissan has about 8.2 percent of the market. Other popular car brands include Ford, Chevrolet, BMW, Mer- cedes-Benz and Hyundai, but there are now a wider range of cars on the roads than ever be- fore. e current average new price of a vehicle in Saudi Arabia is between $22,000-$22,500. e market for used vehicles is fragmented and largely unorganized at the present time, but the average age of vehicles is around eight years old. However, no matter the vehicle, in Saudi Arabia, when it comes to cars, the own- ers take them in for service rather than trying to do even simple maintenance. "When it comes to Saudi Arabia, it is 100-percent do-it-for-me," Shaikh said. "No one changes their own oil, and no one does their own automotive repairs." While vehicle owners may not be interest- ed in doing their own service, they also don't tend to put it off. e weather, which includes extremely hot, dry and dusty summers, can be very rough on automobiles. Temperatures in the summer in the capital average 96 F (36 C), but increasing temperatures can reach 120 F (49 C). "Even with our high standard of living, the car is an essential investment, and Saudi peo- ple like to see it last," Shaikh explained. "ey will take it in for oil change rather frequently — sometimes every 3,000 miles or sometimes even less. is is because everyone commutes in their cars. e extreme weather is harsh on engines, and tire wear out is common." New Legislation Means New Opportunities One significant factor that has aided Petromin Express's growth is that during the past decade the Ministry of Commerce in Saudi Arabia is- sued new legislation directed at dealerships that was a serious game changer for service operators. Previously, dealerships denied war- ranties if consumers went outside their busi- nesses for an oil change, but under the new law warranties are fully covered — similar to the Magnuson-Moss Act in the United States. As a result, in Saudi Arabia, dealers cannot deny the consumer coverage if they have a professional oil change completed at an aftermarket shop. Petromin not only offers oil changes through its quick lube brand, Petromin Express, but also has its own brand of lubricants. "Currently, 85 percent of the oil that our customers choose is our oil," Shaikh said. "e truth is, the majority of customers don't spec- ify a brand. It isn't really the oil that is a de- termination of why we have a loyal following. Our customers like our service standards, and we treat our customers with respect. In 2001, our market share was just 2 percent. Now, it is 37 percent, and we are competing as a global brand." is global distribution is notable because Petromin Express opened its first centers in Egypt, the UAE and Pakistan in 2016. While IN MOST OF OUR CITIES, PUBLIC TRANSPORTATION IS VIRTUALLY NON- EXISTENT, SO PEOPLE TRULY RELY ON THEIR CARS." Waheed Shaikh, COO of the Al-Dabbagh Group and executive director, Petromin.

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