• SHARE

Naotake Bando likes the simplicity. The 61-year-old motorist, who recently pulled into a self-service gas station in Chofu, western Tokyo, said he prefers to fill up his car by himself.

He doesn’t want to bother attendants with a mere 10- or 20-liter fill-up. And he gets annoyed by the “free services” provided at conventional stations. The price is also cheaper at the self-serve pumps.

“One of the things I hate most (about full-service stations) is that sometimes, attendants use dirty rags, and my windshield gets smudged,” he said.

Bando is among a growing number of motorists turning to self-service gas stations, whose numbers are rapidly increasing across the nation following an easing of fire regulations in 1998.

Oil companies see the self-service business as a quick way to cut personnel and other costs to survive intense competition as they build new stations and convert old ones.

But they are struggling to eke out profits from self-service.

According to the Oil Information Center, there were 2,743 self-service stations as of the end of June, up from 1,632 a year ago. There are currently some 51,000 gas stations in Japan, and the number of conventional outlets has been on a steady decline.

Self-service “has operating-cost merits, largely in personnel expenses,” said Kaoru Hashimoto, manager of retail sales at Idemitsu Kosan Co. “Most of the new outlets we are opening are self-service stations.”

Of the firm’s 264 self-service stations, about half were converted from full-service, he said.

For stations selling 200 kiloliters to 300 kiloliters per month, a self-service outlet needs fewer than half the usual crew of five or six attendants needed by full-service outlets.

The firm, which started opening self-service stations in earnest two years ago, plans to increase their number to 700 over the next two years.

“Sales at self-service stations are higher than expected,” said Takara Tsutsui, executive officer at Showa Shell Sekiyu K.K., which had 242 self-service stations as of the end of August.

Oil companies cite the cheaper pump price they can offer — said to average 2 yen less per litter than that charged at full-service stations — as the reason for the popularity of self-serve stations. They also said many motorists prefer not to be annoyed by station attendants giving relentless sales pitches.

“The price matters to me,” housewife Hatsumi Tsuda, 47, said as she gassed up her station wagon at a self-service station in western Tokyo. “At first, I was worried about doing it correctly. But I can fill my car up easily now.”

Except for those with high-volume sales, many self-service stations are struggling to make ends meet.

According to oil companies, 50 percent to 60 percent of self-service stations are in the red.

“It’s not that easy,” said Masatoshi Takekawa, Nippon Oil’s general retail manager. “We know it’s not profitable unless we move a large volume,” he said. The lack of income from other services provided at conventional filling stations, including car washes and tire replacement, also hurts, he added.

According to Yuji Kakimi, who runs 10 full-service gas stations in Tokyo and is a vocal critic of self-service stations, the gross profit from selling 25 liters of fuel is only 125 yen.

Kakimi calls self-service stations “vending machines” built by oil firms, which distribute large volumes of gasoline without a viable profit structure.

He worries that the spread of self-service stations will only aggravate price competition, slicing into an already razor-thin profit margin.

To make up for the profit shortfall, oil companies are meanwhile opening coffee shops and convenience stores at their self-serve stations.

Idemitsu stations boast Pretail convenience stores and Pronto coffee shops. Nippon Oil, which has a Lawson store at one of its stations, plans to expand the number of these outlets to five or six by the end of March.

Toshinori Ito, oil and utilities analyst at UBS Securities Japan Ltd., expects the number of self-service stations to reach 3,500 by the end of March.

But the ratio of purely self-service stations to the total — currently well below 10 percent — will not reach that of the United States and some European countries, where the level is about 80 percent, he said.

“For these countries, 70 percent of gross profits comes from store business, but that is impossible in Japan,” he said, noting that Japanese consumers have little reason to shop at gas station stores when competitive stand-alone convenience stores are so abundant.

Ito said the push by oil companies for self-service stations is a belated quest by the industry to create a viable business model after being long protected by regulations.

“Unlike other retail sectors, gas stations have not had to face competition, and industry rationalization efforts have been slow,” he said. “The self-service stations are part of the structural changes taking place.”

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.

SUBSCRIBE NOW

PHOTO GALLERY (CLICK TO ENLARGE)