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September 9, 2010

The First and Only Independent Newsletter to Focus on Lubricant Distributors.

Your needs, your concerns, your outlook. No bias, no fluff and no punches pulled. Whether it's buy backs or brand battles, allocation of co-op ads, operating costs or turf wars, Jobbers World keeps you on top of the issues that matter to YOU: The Lubricant Marketers!

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Sour Grapes?

Last week we reported that Honda awarded its genuine oil contract to ConocoPhillips. This business was formerly serviced by the long-time incumbent, ExxonMobil. Whereas bad news for ExxonMobil, it was certainly good news for ConocoPhillips. Further, as we said in our article breaking this story, its also good news for ConocoPhillips marketers since they will likely enjoy additional buyback business with ConocoPhillips as a result. Well, from what JobbersWorld is now hearing, there is more to the story. And according to some marketers, the rest of the story smells a little like "sour grapes."


Although Honda's decision is good news to ConocoPhillips, some marketers say, that what should be good news for them as well could turn bad.  This is because these marketers are multibranded and sell both ConocoPhillips and ExxonMobil lubricants.  And rather than graciously conceding defeat, many of these marketers say ExxonMobil is "very disgruntled" about Honda's decision. As a result, ExxonMobil is now putting pressure on its marketers to turn their backs on the ConocoPhillips Honda program.


Specifically, JobbersWorld has learned... ExxonMobil is advising some marketers that carry both ConocoPhillips and ExxonMobil lubricants that their alignment with ExxonMobil will be further scrutinized if they lead with ConocoPhillips engine oil rather than ExxonMobil when selling to Honda dealers.  In the views of these marketers, this approach is nothing short of a "veiled threat." In fact, several marketers say they were told if they participate in the ConocoPhillips program with Honda dealers, their alignment with ExxonMobil could be brought into question and this could affect their future buyback business with ExxonMobil.


Interestingly, marketers say the pressure ExxonMobil is now putting on them with regards to Honda dealer business may be symptomatic as to why Honda made the decision to switch from ExxonMobil to ConocoPhillips. This is because in their view the decision is about the value of the lubricants offered, not the long-standing relationship Honda had with ExxonMobil. And apparently, in Honda's view, the value ConocoPhillips brought to the table exceeded the value offered by ExxonMobil (inclusive of its long-standing relationship). But, marketers add, although relationships may not make or break a deal, never take them for granted.


So marketers now ask, is ExxonMobil truly willing to put its long-standing relationship with its aligned marketers on the line in an attempt to claw back the Honda genuine oil business without offering a better value proposition? If so, are they prepared for what could be a loss of that marketer's business as well? And even if they are, have they thought through how other OEMs might react to these scuffles?

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