The Racer's Sludge

Race-Car Owner Andy Granatelli thought he had it made. After 23 years of disappointing finishes in the Indianapolis 500, Granatelli finally saw one of his entries win the big event two years ago. And besides coming in first at the Brickyard, Andy was ahead in an even more important competition. The STP Corp., of which he is president and a major stockholder, was outpacing all its engine-additive competitors on the way to a $65 million sales year.

This year Granatelli's corporate glory has vanished in a cloud of blue exhaust smoke. An article in last July's Consumer Reports criticized STP Oil Treatment, warned that new-car warranties might not cover damage from an overdose of the additive and sent STP stock tumbling from its high of 58. In one frenzied trading day last week, the stock fell from 331 to 22. It finished the week at 181. Reason: Granatelli announced that third-quarter earnings had fallen 69% below last year's level of $3,367,000, to $1,049,000.

Elixir Mixer. Many automotive engineers have long dismissed oil additives like STP, Bardahl and Wynn's as all but useless in normal engines. Most motor oils today are fortified with so many acid neutralizers, detergents and thickeners that any additives can thwart their carefully calculated effects.

Granatelli insists that STP is a valuable lubricant, but the elixir mixer guards his formula as if it were vital to the national security. The major ingredient is apparently polyisobutylene, a long-molecule petrochemical that sells for about a dollar a gallon, appreciably less than STP. In fact, STP spends more on advertising the oil treatment than it does on producing it. Such high-compression hustling may be the main reason for STP's history of success. Even now, auto-suggestive motorists--bombarded by radio and TV commercials ("the Racer's Edge") that often feature Granatelli and his wife Dolly--are snapping up STP almost as fast as ever. Though earnings are down, revenues are up about 3%. Granatelli contends that the earnings drop is due to increased spending on advertising and new product development. But there may be more trouble ahead. Consumer Reports testers have offered their data to the Federal Trade Commission, which is looking into advertising claims of companies that make petroleum products, including STP.

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