Do diverging motor oil standards threaten market stability?
This year, two new motor oil specifications will hit the North American market, and for some this has the potential to be a crisis in the making.
The much-anticipated GF-5 specification from the International Lubricant Standardization and Approval Committee (ILSAC)–which provides the “starburst” approvals on oils–and the American Petroleum Institute (API) was finalized this past December and is set to debut this coming October.
The key goals for the introduction of this new standard are to improve performance over the existing GF-4 standard in the areas of emissions system protection, seal compatibility, fuel economy, E-85 rust protection and emulsion retention, engine sludge protection, turbocharger protection, and piston cleanliness. There is no requirement to improve on the oil thickening, wear protection, or volatility over the GF-4 oils currently in the marketplace.
The standard has been in development for years, but by some accounts the announcement of another standard entering the market may have thrown a filter wrench into the mix: Dexos. Developed by General Motors, Dexos is to be its new global motor oil specification. GM plans to have Dexos I supersede the current GM6094M specification for most 2011-model year GM gasoline vehicles, and plans to also use Dexos I to replace the GM4718M spec for Corvette, Cadillac, and engines with turbochargers, which stipulate Class III synthetic blends (Mobil 1 or the equivalent).
While certainly not the first manufacturer-specific specification to hit the market–virtually every European carmaker has one–the mere fact that it is General Motors and not a small-volume niche player making the introduction has raised concerns.
One of these concerns centres on the incompatibility of the two new oils. While readers should not be concerned that there will be some chemical reaction between the two, their chemistries are very different.
As with all specs, it is only performance which is specified; which formulation is chosen to meet the spec is up to the individual supplier. However, base oils and additives have certain properties and performance limits; chemical engineers are limited in their options as a result.
GF-5 has one set of performance requirements to meet. These dictate a certain type of additive package and a different base oil, called a Group II base oil, at a minimum. (However, current information indicates that formulating 0W-20 oils requires the use of Group III, or synthetic, base oils.) In the vernacular, an oil made with Group II base oil can be considered “conventional.”
As noted, Group III base oils are called “synthetics.” And that is what Dexos oils will likely have to include in their formulation.
In addition, a different, more expensive, additive package will be required.
While many of the differences appear small, two differences in particular are causing a stir. One is the degree to which the two standards will require the use of molybdenum disulphide, an expensive and difficult substance to work with.
The other is the aforementioned base oil. Group III base oils (synthetics) have for the most part been restricted to premium brands in the original-fill market, and premium-level products in the aftermarket.
GF-5 standards seem to have been calculated with this in mind, providing a performance improvement in a number of areas while at least considering cost issues.
This is not so much the case with Dexos. As the fill for all 2011-model year GM cars, it transforms the playing field, both for the trade and for the car owner.
“Obviously Dexos is going to cost a lot more than GF-5,” says Dr. Scotti Lee, a director of the Automotive Oil Change Association and head of its technical committee. “How much more we don’t have a handle on yet, but people are talking about 45%.” While the formula is more expensive than GF-5, there is also the issue of licensing costs: $1,000 a year per product (of which there are four), plus 36 cents per U.S. gallon. These are much higher than fees charged by the API, where licensees pay a flat $1,250 per company, and a royalty of 0.15 cents per U.S. gallon only after the first one million gallons, to show the “donut” and “starburst” logos.
Lee adds, “We asked Eric Johnson at GM,” who has been the point man for presentations on the new standard, “what were they going to do on an education front?” Lee says Johnson told him part of the licensing fee was going to fund customer education. Lee doesn’t buy it. “The people who end up educating their customers are the fast oil change [shops].
“In the fast lube we are worrying about Ford, Chrysler and all these other companies sitting back and wondering, ‘Why shouldn’t I do it?’ So a lot of knowledge has to be shared, and the people who are touching the cars have to know.”
His points echo those in a letter sent to Johnson by the Independent Lubricant Manufacturers Association, which went so far as to call claims that part of the royalties would be used to fund consumer education “disingenuous.”
“It becomes an information nightmare sometimes, because the OEMs aren’t always great at putting a lot of information out,” says Lee.
He recalls the situation with a VW spec, 505.1, that ran into trouble in the marketplace when supplies of motor oil meeting that spec became scarce and commanded a premium price. Some shops kept a case of 505.1 oil on hand and a pad of waiv-ers nearby when customers, shocked by the cost, wanted to opt for a less expensive option even if it voided their warranty. He worries that will be a potential problem if Dexos supplies aren’t stocked at the shop and jobber level due to availability or cost.
Those on the supply side of the GF-5-versus-Dexos discussion aren’t keen on that possibility, but aren’t prepared to ring alarm bells just yet.
“This is all so recent,” says Dennis Favaro, national market-ing manager, Valvoline Canada. “We haven’t wrapped our heads around this. Everybody got their Dexos marching orders, and everyone was waiting for the GF-5 shoe to drop,” which it did in December. “From a product perspective, how do we deal with putting out a separate product?” Or products, that is, since GM is calling for a Dexos I for spark ignition engines, and a Dexos II spec for light-duty diesels.
One point that is clear, he says, is that Dexos takes a re-refined option off the table, since used oil ends up in the same bin. And that, he says, may affect some private-label marketing programs. A larger issue, to his mind, hinges on whether it will be possible to make and market a “universal” or “dual-spec” product meeting both GF-5 and Dexos specifications.
Setting cost and technical challenges aside, being able to engineer a product to cross that divide may be irrelevant if General Motors treats Dexos the same way some automotive transmission fluids are treated by the automakers.
“They will only let you market ATF +4 if it is an ATF +4 licensed product,” not just if it meets the spec, he says. “Chrysler requires an exclusive naming,” meaning that even if a product meets multiple specifications, you can’t say so on the bottle. Whether that is the approach that GM would take, he still could not say. And even if a dual-spec product were allowed, it may not be the way to go.
“It’s more expensive [than GF-5]. It is 100% synthetic and has a Dexos additive package which is different. Inherently, it is more costly to blend.”
How much more costly is hard to predict, as raw material costs can shift pricing up or down, and the final price you pay can be subject to market forces. According to a newsletter article published by Shane Terry, president, North American Lubricants Co., the rise could be significant on all fronts.
“Due to the primary use of synthetic Group III base stock, added detergent, dispersant and organic friction modifiers, extensive research and development costs, and GM licensing and royalty fees, we anticipate Dexos engine oil will cost 30% more than GF-4 product. In comparison, GF-5 i
s expected to represent an increase of 20%. If GM moves to the tightened Sequence VID fuel economy requirements in late 2010 as expected, the addition of moly to the formulation will add another 20% to Dexos product costs.”
Accordingly, a dual-spec product might be deemed a bad marketing move if it means that a company’s offering would be more expensive than competitive GF-5-only products, even if it did offer some potential pricing advantage at the Dexos end due to increased volume.
“Jobbers and WDs need to be keeping an eye on how this will affect their SKUs,” says Favaro. “Will you end up with two 5W30s, etc.?
“And from a customer standpoint, you have to be astute about whether an oil is going into a GM vehicle. It’s just going to throw another SKU in and increase confusion.”
David McDuffe, product and pricing manager, Wakefield Canada, distributors of Castrol products in Canada, says even with the introductions only months away, it is still too early to define the full impact.
“We had some stability in the base oil market and there are a lot of factors that go into motor oils costs. Obviously there are new technologies and new additives too, but we’ll have to see.
“It’s important,” he adds, “when communicating to con-sumers, that the transition to the new GF-5 motor oil will be seamless. If there are any questions from consumers on how it will affect them, that’s what they need to answer.
“This is being done for the right reasons, and to improve vehicle economy and vehicle emissions. They should view it as a positive step forward for everybody in the industry.”
He calls attention to the fact that, as complex as the effect of the changes might appear to be, they are not being introduced in a vacuum.
“By 2011, passenger vehicles will be required to meet new government regs; that was part of the challenge. There are new engine standards, diesel fuels, E85, etc. There are all kinds of things in play here. There’s a whole new set of demands, and it is our challenge to help vehicles meet those demands.”
McDuffe goes on to emphasize the import-ance of ensuring that everyone in the stream, from jobbers and counterpeople to service techs is fully educated on these products, in order to communicate properly to the consumer. “Within the industry, we are close to the product, so we ‘get it,'” he observes, “but we can’t make the assumption that everybody does.
“There are some great things happening and some tangible benefits with the new specifications; we just need to communicate that properly.”
Amanda Li, marketing manager for Shell Lubricants Canada, suppliers of Quaker State and Pennzoil products, is equally positive about the changes.
“We think that GF-5 is an evolution and a good improvement for the whole industry. Our R&D team has been working on the formulation not only to meet the new standards, but also to bring our product performance to another level.”
She says that a GF-5 product is poised for launch later this year, but that it will not be alone. On the Dexos front, she believes part of the con-cern is a lack of familiarity in North America with a concept, manufacturer-specific oils, that has become commonplace in other markets.
“Maybe it’s new to North America, but many other OEMs in other parts of the world will have their manufacturer-specific standards.”
While Li certainly feels that her company is well equipped to handle the technical require-ments, she does not soft-pedal the importance of getting the right information out about the shift. There are questions everyone needs to ask.
“How do we talk to the trade and to the consumer so that they know what this is about? What should I do to recom-mend the product, and what should I do to select the right product?”
She says the strategy for the trade is to provide point-of-purchase materials that can serve as talking points internally and to the consumer; she also hopes to bring to Canada a more comprehensive training program that has already been launched in the U.S. The plan for Dexos, while still in develop-ment, is similar, with a heavy emphasis on online initiatives.
Li says that jobbers would be wise to plan for a cost increase, and to do some groundwork with customers to determine where their potential for Dexos product might be. Ultimately, a carefully considered, reasonable approach is best.
“It is like anything new,” she says. “Some people will test it first, others will want to wait a little bit. It really depends on your own strategy and objectives, on GF-5 and Dexos.
“This is technology advancement. These are new industry standards. If your objective is to provide your customers with high quality and a variety of products that can meet their needs, you should start to think about it and get ready to accept the change.”
Other resources: Additive package supplier Lubrizol has created an information site at www.GF-5.comthat is worth a look.
Extended Drain Intervals Put Demands On Filter Too
With extended oil change intervals come increased demands on the filter. Some manufacturers have used improved filter media to prevent deterioration; some filters, like the Fram model shown, also include steel reinforcement.
Part of the reason the new motor oil standards were required was to address the increased demands of the extended oil change interval, which ramps up demands on filters, too.
Concerns have been raised as to whether all standard replacement filters can provide effective protection over oil change intervals that are rising to 12,000 km and beyond, even for domestics.
While trapping dirt is obviously a concern as oil change intervals grow, so is the struc-tural integrity of the filter media itself.
It is far from a new concern.
BMW cited the need for revised filter media on certain 2000MY and later models because filter media was deteriorating. (BMW was pushing out oil changes to 24,000 km.) The new oil filter element incorporated an improved filter paper, which prevented filter deterioration caused by high engine oil temperatures over extended time. The new oil filter element was phased into production on M54-powered vehicles in September of 2000, and on all M62-and M73-powered vehicles in July 2000.
While BMW instituted a one-filter program for those models, in the after-market manufacturers may be providing a range of filter options for vehicles as engine options and needs vary.
Counterpeople and their service provider customers should be careful to discuss the options with consumers to ensure they have the right filter for their vehicle and maintenance habits.
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