Atlantic Richfield Co. said yesterday that sales by its service stations have increased by about 50 percent since the company dropped credit-card sales slightly more than three months ago.
At the same time, Mobil Corp. announced that it would join other major oil companies in offering a discount to motorists who pay in cash. Mobil said it would give a 4-cent-a-gallon discount to cash customers in six Midwestern cities, with the change effective yesterday.
The two events--one company boasting of the wisdom of its decision to eliminate the use of credit and another making credit-using customers pay a premium--are symptomatic of broad changes in gasoline marketing. In the face of declining consumption, market-share hungry retailers and oil companies are using a variety of devices to bring in more customers.
"We're not trying to be white knights, but if you give the consumer what he wants he will respond," Arco Petroleum Products Co. President James S. Morrison said yesterday. Morrison announced results of the first quarter of operations without credit cards in a four-city satellite-transmitted press conference.
He said that the company's total gasoline sales had risen approximately 15 percent since its cash-only policy translated administrative savings into lower gasoline prices. Sales by Arco-brand gasoline stations have increased about 52 percent, company officials said. Morrison said that dealers, who were initally cool to the idea, generally support it now. "About 80 to 85 percent of our dealers are happy with the programs and have improved earnings," he said. Some other have switched to taking other types of cards, he conceded.
One negative impact of Arco's move is the loss of its New Jersey Turnpike service stations. The turnpike authority required that credit-card service be available.
Morrison said that the company was passing along the 2.8 cents-per-gallon total savings from eliminating its costly credit operations to dealers, who then make individual decisions about how to price gasoline. Morrison said that the switch enabled some dealers to undercut other oil-company prices by as much as 7 cents a gallon. Where the price of Arco gasoline goes in the future will depend on the crude-oil market and consumer demand since there are no further savings to pass along, he said. In the meantime, increased volume has meant that Arco has made money from dropping credit cards even though it has kept none of the savings, he said.
Arco has been the nation's eighth largest gasoline retailer. It has fewer than 100 stations in the Washington metropolitan area, most of them in Maryland.
Mobil, the nation's second largest oil company, said yesterday that it would recommend to its dealers in Detroit, Chicago, Milwaukee, St. Louis, Minneapolis and St. Paul that they offer their cash customers a discount.
The company has run a similar test project in Indianapolis, Phoenix and Baton Rouge. Mobil will add a 3 percent service charge on credit card sales to help hold down high credit service costs, a company spokesman said.
He added that the oil company also would lower its wholesale price in the six cities to help encourage dealers to offer discounts for cash.
Like other major oil companies, Mobil has no plans to discontinue credit card sales as Arco has done. Arco's Morrison called the discount approach of other companies "walking both sides of the street" and said that Arco's plan was attracting customers because it is simpler.
Exxon Corp., the nation's largest oil company, has launched a national TV campaign to convince drivers to pay in cash rather than use credit.
Earlier test marketing of cash discounts was well received, the company has said.
After those results, Exxon decided to expand the program to most areas in which it operates, including the Washington area. Standard Oil Co. (Indiana) has launched a similar program.