The approach of the deadline for the new service category CJ-4 is keeping some lubricant producers awake at night. The latest in a series of frequent legislation changes is proving to be an expensive and challenging hurdle for heavy-duty motor oil (HDMO) producers who are grappling with how to turn an increasingly expensive process into an opportunity for competitive advantage. In October 2006, the 2007 model heavy duty diesel trucks will be introduced. These models are designed to comply with new and challenging EPA air emission regulations and require a new engine oil category, CJ-4. Engine design changes to comply with these regulations have resulted in performance hurdles that are unique to engines yet also qualify as meeting CJ-4 standards. Consequently, HDMOs are required to pass API-certified tests as well as OEM-specific tests including Caterpillar’s C-13, the Cummins ISB, and Mack T-12, leading to a long and expensive battery of tests before the HDMO can be universally used. Inevitably there will be a rush to certification to achieve an October 2006 rollout, according to Kline & Company’s study Opportunities in Lubricants North America. 2006-2007 “Companies such as Chevron and ExxonMobil have responded to CJ-4 with a two-tier strategy, continuing to market CI-4 Plus oils for use with older engines and marketing CJ-4 oils for 2007 model vehicles. This allows them to meet the CJ-4 requirements as well as provide a less expensive option to fleets using older engines. As CJ-4 oils are expected to be significantly more expensive, this approach will save older fleets money and potentially open the door to new fleet customers,” says Geeta Agashe, director of the Petroleum & Energy practice for Kline’s research division. “Some independent producers are choosing to manufacture only CI-4 or CI-4 Plus oils, creating a kind of ‘tierization’ in the marketplace. With each new round of legislative changes, ‘tierization’ is expected to increase.” In order to meet the API CJ-4 category, ten engine sequence tests and seven bench tests are required-more than any previous HDMO category. The series of CJ-4 and OEM-specific tests are estimated to cost an oil company about U.S. $1 million if all runs result in a pass on the first attempt. The HDMO market in the United States is estimated to be 485 million gallons, which equates to over U.S. $2 billion. “Engine design changes are happening so rapidly that companies without a strategy will face prohibitive challenges as the timeframe to recover costs grows shorter and shorter,” says Bill Downey, vice president and head of Kline’s Petroleum & Energy consulting practice. “With another HDMO category update expected in 2010, lubricant marketers and additive marketers must be prepared to actively seek ways to improve their competitive position.” Opportunites in Lubrication North America, 2005-2007 is part of a comprehensive series of market analyses focusing on lubricant products, end-use markets, and suppliers in the United States, Canada, and Mexico. The other two volumes in the series cover consumer and commercial automotive lubricants.