First Brands (Fram) bankruptcy

[dogememe]

I don’t understand one thing… why are all these brands worth so much?

Let’s say 20% of people change their own oil. And then 50% of those care about the brand. And then 50% of those specifically ask for Fram or Wix. So now we’re at 5% of people in the US that will go out of their way to buy a Fram or Wix. Not a big number, especially when it’s a low margin commodity like an oil filter.

Repair shops and dealers don’t care about brand. Repair shops care about price and dealers put on whatever the OEM ships them.

 

[Hootbro]

I don’t understand one thing… why are all these brands worth so much?

Let’s say 20% of people change their own oil. And then 50% of those care about the brand. And then 50% of those specifically ask for Fram or Wix. So now we’re at 5% of people in the US that will go out of their way to buy a Fram or Wix. Not a big number, especially when it’s a low margin commodity like an oil filter.

Repair shops and dealers don’t care about brand. Repair shops care about price and dealers put on whatever the OEM ships them.

According to the data linked below, the average is 43.5% of people are changing their own oil. Even with your loose assumptions, that is still a lot people that are seeking out brands they are comfortable with and know.

https://www.marketwatch.com/insuran...nty/which-generation-takes-best-care-of-cars/

 

[Durdude]

I think they/we are.

People are smart enough to figure out that "Goodyear motor oil" means nothing. But apparently many MBAs aren't.

Goodyear motor oil? They make boots/shoes too! I saw them at Ross.

 

[Opelman]

Goodyear motor oil? They make boots/shoes too! I saw them at Ross.

I have been wearing Michelin branded work boots for years. The last pair seems to be cheapened up some.

 

[y_p_w]

Would note that this wasn't the only company using the name First Brands for auto products. The spinoffs from Union Carbide used that name. That included Prestone and STP. I think that name was used until Clorox bought them out.

https://www.fundinguniverse.com/company-histories/first-brands-corporation-history/

 

[Fair enough]

According to the data linked below, the average is 43.5% of people are changing their own oil. Even with your loose assumptions, that is still a lot people that are seeking out brands they are comfortable with and know.

https://www.marketwatch.com/insuran...nty/which-generation-takes-best-care-of-cars/

“Where do you get your car serviced” is about 20% for myself and family or friend. The “do you change your own oil” under do you perform your own services 43% seems to contradict. I perform my own services means to some people taking it to a shop may be the reason for the differences. Doesn’t seem clear. I never see any private person changing oil anywhere except myself. No one is working on a car or very rarely in my travels.

 

[Hootbro]

“Where do you get your car serviced” is about 20% for myself and family or friend. The “do you change your own oil” under do you perform your own services 43% seems to contradict. I perform my own services means to some people taking it to a shop may be the reason for the differences. Doesn’t seem clear. I never see any private person changing oil anywhere except myself. No one is working on a car or very rarely in my travels.

I have never seen you change you oil either.

 

[Fair enough]

I have never seen you change you oil either.

It says about 20% don’t take the car for service to a shop is the short version. That doesn’t exclude oil changes, service. If 43% were changing oil, I would see one once in a while out on the driveway doing it.
You must not drive by my house as I always change oil every time out on my driveway, and I am very slow about it.

 

[JohnnyJohnson]

The last stats I read on oil changes it was about 10% that actually did DIY oil changes.

 

[ecotourist]

Deming's first principle included staying in business. "Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs." https://deming.org/explore/fourteen-points/

If you cut product quality so your sales crater, or you don't control costs and lose money on sales, you will eventually go out of business. In my opinion there is way too much short term thinking today - make a bundle and get out quick. But then again no-one pays me millions to manage big companies.

"What did you do in your career, grand-dad?" "I ran 3 businesses into the ground and made a bundle each time. It was very satisfying, Sonny."

 

[Dave Hess]

BDO has some explaining to do.

 

[TimeFlies]

As for DIY oil changes, I cannot remember the last time that I went an entire week without changing the oil in something. This morning I did 3, generator, ATV, Volvo truck, and it wasn't a busy day. The generator is super easy, remove the fill plug, and tip on its side to drain. For my ATV, I used my suction pump, to empty the crankcase, then fought with the darn oil filter for 50 minutes to replace it. The Volvo, undid the oil pan drain bolt, so 3 different methods.

 

[ZeeOSix]

Deming's first principle included staying in business. "Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs."

Some companies are straying away from the "improvement of product" theses days starting back in 2020 when supply chain shortages were going on, and then more when inflation went wild. And some companies just stay with those product down grades to keep on trucking and raking in money without spending capital money to make improvements - like getting new leaf spring stamping machines, lol. If people keep buying the lower quality stuff for the same price or even higher prices, then what's the incentive for the companies to go back to the better quality they had ... nothing. If sales fall off due to quality cuts, and the company can't get those sales back by addressing issues and improving quality back to what people want to buy, then that's mostly their own fault.

 

[ecotourist]

Some companies are straying away from the "improvement of product" theses days starting back in 2020 when supply chain shortages were going on, and then more when inflation went wild. And some companies just stay with those product down grades to keep on trucking and raking in money without spending capital money to make improvements - like getting new leaf spring stamping machines, lol. If people keep buying the lower quality stuff for the same price or even higher prices, then what's the incentive for the companies to go back to the better quality they had ... nothing. If sales fall off due to quality cuts, and the company can't get those sales back by addressing issues and improving quality back to what people want to buy, then that's mostly their own fault.

Customers eventually figure out that someone else is making a better product. When you lose a customer they may be (and probably are) gone forever. Eventually the business fails. Avoiding that is the incentive.

 

[ZeeOSix]

Customers eventually figure out that someone else is making a better product. When you lose a customer they may be (and probably are) gone forever. Eventually the business fails.

Yep, we've see it happen a few times in this form wrt oil filters ... been going on as long as I've been here.

Avoiding that is the incentive.

Ideally a company should address it preemptively instead of reactively, which would be much harder to recover from.

 

[ecotourist]

Deming's first principle included staying in business. "Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs." https://deming.org/explore/fourteen-points/

And don't forget that Deming (an American) created the post war Japanese miracle - with companies like Toyota, Honda, Sony, etc. They listened and embraced his principles.

I don't see Toyota/Lexus or Honda/Acura going broke anytime soon because of poor product quality.

 

[ZeeOSix]

And don't forget that Deming (an American) created the post war Japanese miracle - with companies like Toyota, Honda, Sony, etc. They listened and embraced his principles.

I don't see Toyota/Lexus or Honda/Acura going broke anytime soon because of poor product quality.

Even so, those companies have had their moments too. Check out the "Car Nut" YouTube channel, he has many talks about flaws with Toyota vehicles. But they do rate overall higher in quality than most.

 

[4wd]

And don't forget that Deming (an American) created the post war Japanese miracle - with companies like Toyota, Honda, Sony, etc. They listened and embraced his principles.

I don't see Toyota/Lexus or Honda/Acura going broke anytime soon because of poor product quality.

Are you talking to yourself ?

 

[4wd]

Even so, those companies have had their moments too. Check out the "Car Nut" YouTube channel, he has many talks about flaws with Toyota vehicles. But they do rate overall higher in quality than most.

The early ones were rust buckets like the others …

 

[SC Maintenance]

I don’t understand one thing… why are all these brands worth so much?

Let’s say 20% of people change their own oil. And then 50% of those care about the brand. And then 50% of those specifically ask for Fram or Wix. So now we’re at 5% of people in the US that will go out of their way to buy a Fram or Wix. Not a big number, especially when it’s a low margin commodity like an oil filter.

Repair shops and dealers don’t care about brand. Repair shops care about price and dealers put on whatever the OEM ships them.

Who knows how much there worth - there worth whatever someone will pay.

However if you take a generic filter with no name, and put Fram on it - its then worth more. My guess is $1 more at retail at least. So maybe thats about 40 - 50 cents at manufacture depending on who is in between. So now figure that out per year based on units sold. If Fram sells a million filters a year at retail, then its worth 1/2 million a year for as long as you want to amortize it.

Take also that Walmart / AutoZone / whomever isn't putting a no name filter on the shelf, but they might put Fram on the shelf, then that is worth something as well.

Branding is its own art.