Can You Recognize The Car That Has Potential?

The performance chemicals category, and specifically the fuel additives segment, deserves special attention.

NPD’s AutoTrac tracks respondents’ purchasing patterns, behaviour, and motivators in both the DIY and installed service markets across Canada on a monthly basis. In NPD’s AutoTrac monthly survey, we asked respondents to indicate if they purchased any additives or treatments–including fuel additives, which is part of the larger performance chemicals category. A fuel additive, as an option for the Canadian consumer, is defined as “a chemical added to [the] fuel/gas tank to improve [the] properties of fuel/gasoline.” Specific product types that are included within fuel additives include complete fuel system cleaners, emission control, fuel injector cleaners, fuel stabilizers, gas treatments, lead substitutes, octane improvers, and water removers.

It is difficult to distinguish which specific type of fuel additive is purchased by the consumer, because even additive manufacturers admit the category “fuel additive” is wide-ranging. In order to unravel some of the mystery behind fuel additive interest and consumer purchases, NPD is examining the type of consumer that is purchasing these additives, and attempting to uncover some of the motivation behind the interest in this segment of the market. Furthermore, we will be able to examine and share if there is an upsell opportunity for fuel additives with consumers when they visit a service provider.

In the DIY(do-it-yourself) space within the traditional retail channels, fuel additives drive the growth of the category.

The channels that help to drive this growth are as anticipated–the top spots are held by mass merchants and gas stations, collectively accounting for almost 80% of transactions conducted in 2006. Traditional auto parts stores fell right in the middle of the pack. Interestingly, grocery stores and independent repair shops as a channel for fuel additive purchases both experienced growth rates of over 30% over 2005. The emergence of grocery stores as a participant in the DIY automotive space over the last year has been noticeable in a number of other consumer-driven categories. Of particular interest is the fact that independent repair shops are capturing an increasing share of DIY consumers. NPD has published information that the independent repair outlet is one of the primary outlets for repair and maintenance of Canadian vehicles. The interpretation that can be drawn is that the independent repair channel is increasing the value proposition to consumers and up selling products within their facilities. While being a trusted advisor for vehicle maintenance and repair, the facility and owners within can provide products and advice that the average consumer can use. Fuel additives and the use of these products do not require a great deal of prerequisite technical knowledge. Therefore, independent repair shops are extending relationships beyond installed service into the product or DIY space of the aftermarket. In order to target these markets more effectively, we can look into who the DIY consumer really is.

Who is the DIY consumer?

Taking the preceding outlets into consideration, we can draw up a profile of the fuel additives consumer in order to target the market more consistently.

Consumer demographics for this segment of the market indicate that two-thirds are male, middle aged (from 35 to 44), and fall within the median income bracket of $55,000 to $100,000 annually. However, vehicle statistics provide greater insight into where opportunity exists.

Vehicles that drive more kilometres in a given year show the greatest rate of growth.

Consumers that report that they drive between 50,000 and 60,000 kilometres a year reflect the fastest growing segment for these products, with a growth rate of more than 30% in 2006 over 2005.

However, significant growth is seen from vehicles that drive between 20,000 to 30,000 kilometres in a year, showing a growth rate of approximately 9% from 2005. This indicates that the message about fuel additives and the requisite benefits are making an impact on vehicles with higher-than-average yearly mileage.

Additionally, with greater kilometres being added to a vehicle, it drives the vehicle into service outlets for routine maintenance and repair, adding possibilities for education and sale of these products.

By all accounts, these consumers are picking up the message. Ultimately, consumers want their vehicle to perform optimally, with the minimum investment–and these additives provide this opportunity. To further support this, NPD finds newer vehicles, those within the 0-3 and 4-7 year old age brackets, comprise the majority of vehicles that are having fuel additives added in 2006. While some light passenger vehicles are showing a drop in transactions for these types of additives, light trucks and SUVs are demonstrating the greatest growth in transactions from 2005. Combined, these segments’ use of fuel additives increased by close to 20% in 2006. Consumers with these vehicles are demonstrating, by their purchasing behaviour, that maintaining optimal performance, real or perceived, is a priority compared to light passenger vehicle owners.

Performance chemicals are best targeted towards those consumers that wish to not only improve the performance of their vehicles, but to maintain the performance to as close to new as possible.

Hence, we uncover the preceding statistics.

However, older vehicles (in the 11-years-old-and-greater age group) are prime users of fuel additives.

These vehicle owners do not perform as much scheduled maintenance, or other higher-return maintenance of their vehicles, as those with newer cars. Without the visit to the independent repair facility, the opportunity to upsell the DIY product or provide the option of performing the service for the owner is lost.

By targeting the vehicles with the greater propensity to use these types of additives, the opportunity for an upsell is greater and hence helps to drive profits.

The NPD Group tracks consumer purchases, buying patterns, behaviours, and retail satisfaction across a wide range of automotive services performed on vehicles in Canada and the United States.