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GF-5 IS COMING!
For those of you that have not heard, there is a new passenger car motor oil performance category on way. For those that have heard faint whispers of a new specification, hopefully I can shed some light on the developments. For those
that know and understand the possible
market ramifications the new standard may bring…hold on to your hats! |
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The International Lubricant Standardization and Approval Committee (ILSAC) is currently working with OEM’s, additive companies and oil marketers to develop a new passenger car engine oil performance standard, GF-5. The new specification
is scheduled for implementation in vehicles for model year
2011. To meet this timeline, API should issue its first GF-5 license to oil marketers around July of 2010.
The primary OEM rationale for the new performance
standard is:
1) Improvements in fuel economy and fuel economy retention
2) Improved engine oil robustness
3) Increased protection of emission control systems. |
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Improvement in fuel economy and fuel economy retention throughout the oil change interval is very important to OEM’s. They are facing increasingly stringent Corporate Average Fuel Economy (CAFE) requirements, mandated by the U.S. government. CAFE results require the OEM to average the mpg of all cars and light trucks sold throughout its fleet, nationwide. The more high-performance vehicles or SUV’s they sell, more hybrids must be sold to meet fuel economy standards. Failure to meet these fuel economy requirements is very costly to the OEM’s including paying heavy fines or may even be forced to change its vehicle line-up, regardless of demand or profitability. The U.S. recently approved an increase in the CAFE requirement to 35 mpg, effective 2020. This is near a 30% increase in fuel economy over the current fleet average! You can bet on future developments on this topic in the years to come.
OEM’s are also calling for improvement in engine oil robustness to provide solutions for two major issues; Smaller-displacement, higher-power engines add greater demands on engine oil and extended oil drain intervals encouraged by OEM’s and practiced by many consumers. Today’s higher power density engines call for improved deposit control on turbochargers and piston rings. Deposits formations in these areas cause increased oil consumption and can increase exhaust emissions, especially at cold ambient temperatures. More robust engine oil will also address concerns over low temperature sludge formation.
Second, OEM’s continue to encourage extended service intervals. Many models come with an OEM recommendation for a 7,500 mile drain interval under “Normal Duty Service”. Normal duty service is a topic for discussion by itself. OEM’s are also equipping many vehicles with an Oil Life Monitoring System (OLMS), primarily GM and Honda. This sensor or algorithm system tells consumers when to change their oil. Many OLMS systems let consumers go as long as 10,000 miles between oil changes! Between OEM recommendations and OLMS, the average oil drain interval for consumers today is 4,800 miles, or 3.2 times per year. Because of this trend, OEM’s want a more robust formulation. It sounds like common sense to me, but wouldn’t they solve the problem by recommending a 3,000 mile oil change interval?
OEM’s are not only calling for improved performance in the engine, but also in the tailpipe. The third primary mission for the GF-5 standard is increased protection of emission control systems. Federal and California emission regulations continue to become more and more stringent. Phosphorous and sulfur, two key performance additives, are known catalyst and exhaust gas oxygen (EGO) sensor poisons. The amount of phosphorous and sulfur allowed in the additive formulation may be reduced. At the very least, a new test will be developed to measure the phosphorous volatility and retention. This scenario could effect the protection and performance of the engine oil in older vehicles. Seal compatibility may also be an issue in older vehicles.
You now know why, but what does all this mean to you? The obvious result at the top of the list is HIGHER PRICES. Additive companies will spend millions of dollars on research and development of the new standard. These costs will indeed be passed on to oil marketers and to consumers nationwide. Another major issue affecting the economics is base oil supply. The GF-5 category will demand a higher percentage of group III synthetic base stock due to performance requirements and increased demand for 0w20 grade. This is problematic because there is not ample supply and production of group III base stock in the U.S. to meet the new demand GF-5 would create. Low supply, high demand, equals HIGH PRICES.
As with any new performance category inventory issues become a factor. At what point does the demand from your customers require you to bring in the new product to your shop or bulk plant? Do you keep the old product (GF-4) in inventory because it meets the requirements of the majority of your customer base? Do you have both products in-house and keep double inventory? You get the point. This issue will be more prevalent with the GF-5 conversion because the cost could be as much as 40% higher.
The last possible result from the implementation of GF-5 could be further acceleration of the extended oil drain trend. By OEM’s asking for and receiving a more robust engine oil formulation and higher percentages of synthetic base stock, they may put the extended oil drain campaign on over-drive. This creates a “double whammy” to our industry with higher cost of goods and further decline in car count.
As the GF-5 implementation date approaches, evaluate your individual needs, look for ways to control your cost of goods and partner with a supplier that will minimize the economic effect of this new performance standard as well as provide ideas to increase sales and net profit.
Shane Terry, President
North American Lubricants, Co.
info@nalube.com
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We have something in common. We both provide products and services to fast lubes. Your product, of course, is their life blood – motor oil. We provide many programs, services and training to help fast lubes improve their business operations, thereby increasing the amount of your product they sell. What could be better for your business than a well run fast lube with a highly trained staff and happy customers?
We think it’s time we truly join forces and create a partnership that will benefit you, us and all the fast lubes in your area. That’s why we’re inviting you to become an integral part of our organization.
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| WHAT'S IN IT FOR YOU? |
- Help your fast lube customers increase their sales.
- Find new customers.
- Provide your fast lube customers with training opportunities.
- Keep in touch with the changes in the fast lube industry.
- Follow the regulatory issues affecting your customers.
- Follow the changes as PCMO technology changes.
You will have access to all the programs, training materials and publications AOCA offers. You can become a stronger partner to your fast lube customers by better understanding the challenges they face and be better able to provide them with solutions. You can use AOCA-Talk, the email listserv open exclusively to members, to monitor the real-time
issues faced by operators across the country.
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| WHAT'S IN IT FOR US? |
Through you, we gain another line of contact with our members and access to a host of potential new member fast lubes. We also get a very welcome contact point and source of feedback from the supply side of the industry.
So here’s the deal. We’re inviting you to become an associate member of AOCA and work with us to bring our business enhancement programs to your fast lube customers. What could be better? We see it as a WIN – WIN – WIN situation. You get the opportunity to bring added value to your customers, your customers get the advantages of utilizing our business improvement programs and we increase our strength as an association by increasing the number of fast lube centers we represent.
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| HOW DOES IT WORK ? |
When you join AOCA at this special $500 rate, we’ll arm your sales reps with the information they need to encourage fast lube customers to become AOCA members.
They’ll be ready to talk management and technical training, advantages of being part of
the industry trade group and how AOCA can help them increase their sales and stabilize their workforce.
Each time you get a new member to sign up with AOCA, we’ll refund $50 of your membership dues which you can use as an incentive to your reps. I guess we just added the 4th WIN to this program.
For more details, and to join, go to www.aoca.org or call AOCA at 800-331-0329. |
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GM ANNOUNCES RECALL ON CAR FIRE RISK
After 267 vehicle fires and six injuries, the automakeris recalling 1997-2003 Buick Regal GS and Grand PrixGTP models.
DETROIT (AP) -- General Motors Corp. is recalling 207,542 Buick Regal and Pontiac Grand Prix sedans over a risk they could catch fire, and warned their owners not to park the cars in garages until they are fixed.
The automaker said Friday it is recalling the 1997-2003 Buick Regal GS and Grand Prix GTP models with 3.8-liter supercharged V-6 engines...
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