New technology won't put freeze on fluids

Improving technology in vehicle manufacturing and in maintenance products to keep cars running better and longer is a double-edged sword for automotive chemical suppliers. Extended-life formulations in categories such as antifreeze, and the debut of lifetime-warranted transmissions in vehicles are shrinking the market for fluids and additives, presenting challenges for suppliers and retailers. On the plus side, these new products carry higher retail prices and margins.

As the market shifts toward longer-life products, suppliers are going along, promoting these less frequently purchased products while exploring new growth segments, such as diesel additives and products targeting the sport performance market.

"The general trend in fluids is to move closer and closer to a fill-for-life standard," said Larry Beaver, vp of technology at Radiator Specialty Company. "The day will come when there are fewer and fewer fluids to put in."

While this trend would seemingly panic a company such as RSC, which makes oil and fuel additives, brake, power steering and transmission fluids, and engine cleaners under the brands Solder SeaVGunk and Engine Brite, the company has responded proactively by focusing on products geared toward older vehicles. A new line of additives and fluids will debut this fall for older cars with 50,000 or more miles. Also in the works is a line of diesel additives related to a small but growing segment of diesel vehicles now coming to market, such as some Volkswagen models. The pattern of declining sales continued last year in functional fluid categories, according the to the Automotive Aftermarket Industry Association (AAIA). Sales of transmission, brake and power steering fluids all declined at the top automotive aftermarket chains, according to AAIA, while fuel and oil additives fared slightly better, showing slight growth. Transmission and diesel additives were up by more than 30%.

As for the largest revenue generator in chemicals--antifreeze--sales in that category declined 5.5% at the top auto chains. Again, better-performing products are leading to less purchase frequency of antifreeze, while weather also was a factor.

Antifreeze formulations specific to certain makes of vehicles began emerging in the mid-1990s. While at least five different colors/formulations are now on the market, depending on the make of cal, the latest innovation in antifreeze is a universal formula that works with all the newer models. Old World Industries launched its Peak Global extended-life antifreeze and coolant last fall, and now Prestone has followed suit. These universal formulas are expected to eventually replace the make-specific products and reduce retailers' SKU counts. Both provide a five-year, 150,000-mile limited warranty with a flush and fill.

"Retail customers were becoming overwhelmed by the numerous varieties of antifreeze/coolant they were carrying to meet consumer needs, which led to higher inventory costs and lower returns on their investments," said John King, Prestone product manager.

With the confusing category driving many consumers to service providers to check and fill antifreeze, these new universal formulas may revive DIY coolant sales.

"We wanted to make it easy and simplify the situation," said Jeff Stauffer, vp of marketing at Old World Industries. "It also is a benefit to us in terms of focusing and marketing one brand that we can put a lot of emphasis behind."

These new offerings in Peak and Prestone brands are a step-up in price to the traditional green ethylene glycol-based antifreeze used for older models of vehicles. For that reason, most retailers will offer a good/better/best selection, including make-specific antifreeze products such as Dex-cool for General Motors cars. Stauffer expects universal antifreeze will one day replace make-specific products.

Demand for premixed antifreeze is another factor reshaping the category, considering 70% of antifreeze sold is used for topping off rather than a complete flush and fill. Most companies make both concentrate and premixed antifreeze, with the ready-to-use segment growing to about 30% of sales, according to Stauffer.

Another niche segment is low-toxicity antifreeze, such as Old World's Sierra and Prestone's LowTox brands. These propylene glycol-based products appeal to those concerned about poisoning of pets or children from regular antifreeze.

"It's nowhere near a huge piece of the market, but it has its place. It's a niche offering," said Stauffer.