2007 PCMO Trends

October 2007

The symbol is a service mark of Afton Chemical Corporation.

North American Automotive Environment
Changes in sales volume have driven a major business re-
structuring*
General Motors North America
 Sales estimate of 4MM vehicles in 2006; Lowest volume since 1970
 Announced closing of ten (10) facilities by 2008 and reduced shifts at others
 Explored merger/partnership with Nissan/Renault
 Vows to fend off Toyota and remain No. 1 Global Auto Company

Ford North America

 Sales estimate of 2.9MM vehicles in 2006
 Ford management announced their “Way Forward Plan”
 Bill Ford relinquished some control; New CEO Alan Mulally named
 Announced closing of up to fourteen (14) facilities by 2012
 ~ 38,000 UAW workers have accepted packages to leave.
 Salaried workers had until end of January 2007 to decide
* Total estimated 2006 North American sales = 16.56 million units
North American Automotive Environment
Chrysler
 Sales estimate of 2.1MM vehicles in 2006
 High year-end inventories have lead to extended plant shut-downs and
planned production cuts.
 Split from Daimler and spun-off to Cerberus finalized August 3, 2007

Toyota North America

 “The Big 4” is the new phrase
 Sales estimate of 2.2 MM vehicles in 2006
 Operates 13 plants in North America with 2 others announced
 2007 global production target of 9.42MM units could surpass GM

What will Bubba think?

North American Automotive Environment
Company 2006 US Sales Units Market Share %
BMW 274,432 1.7
MB 247,934 1.5
DaimlerChrysler (inc. MB) 2,390,585 14.4
Ford 2,901,090 17.5
General Motors 4,065,341 24.5
Honda 1,509,358 9.1
Hyundai - Kia 749,822 4.5
Mazda 268,786 1.6
Mitsubishi 118,558 0.7
Nissan 1,019,249 6.2
Subaru 200,703 1.2
Toyota 2,542,525 15.4
Volkswagen 329,112 2.0
Other 190,409 1.1
Total US Sales 16,559,970 100

2007 North American sales estimated at ~ 16.1 million units

2007-2010 will be interesting times….

Hybrid Technology

Advanced Propulsion Technology

Fuel Cells
US Gasoline Prices reach average record highs
Corporate Average Fuel Economy: Time for A Change ?
Passenger Car CAFE standards have remained unchanged at 27.5 mpg for ~ 20
years.
Light duty trucks & SUV CAFE will increase to 24 mpg by 2011.
Legislators have proposed plans to increase CAFE to ~ 35 mpg for all vehicles by
2020 and some propose 4 % annual increases thereafter.
Supreme Court Carbon Dioxide Ruling
 Supreme Court decided the EPA and State of California have the authority to regulate
carbon dioxide as a “global pollutant”. EPA to draft rules by 4Q2007.
 Automakers have sued the State of California over its right to regulate carbon dioxide
using the argument “carbon dioxide limits are a de facto fuel economy standard and only
the federal government can regulate fuel economy”
 ConocoPhillips becomes first oil company to publicly recognize global warming

@ 18 mpg, 25,000 miles per year = ~ 27,000 lbs of CO2

What’s your CO2 footprint?
Need to plant ~ 563 trees!
Fuel Economy will dominate
Consumer’s pocket book impacted by high gasoline prices
 Political awareness within government
 2007 Bio-fuels Security Act Proposal (phases in 2020-2030)

US EPA has announced new fuel economy tests effective MY 2008

 Affects mandatory fuel economy postings on window stickers; not CAFE
 System designed to better reflect vehicle’s real world performance
 System will likely result in a lower mpg rating for most vehicles
 Tests will account for higher speeds (80 mph), more rapid acceleration, use of
air conditioning (13%) and cold-weather driving (20°F).
 FTP for emissions already requires a low temperature evaluation

Japan will impose world’s highest fuel economy rules

 Today, Japan’s auto fleet is roughly 25 % more fuel efficient than US average
 New standards will boost fuel efficiency 20 – 25 % by 2015
 Will impact global technology strategies
…but in the end, it’s all about the product!
Photos from 2007 NAIAS

Audi Q7 Crossover Diesel Acura Advanced Concept

Nissan Bevel Crossover

Chevy Camaro Convertible
Source: GM Presentation to API’s DAP, Aug. 2006
 Refinements to the internal combustion engine
Strategies focused on improving fuel economy and/or power output
Current
Variable Valve Timing
Cylinder De-activation Systems
Increased use of Turbochargers
Direct Injection Gasoline
Alternative Fuels
Hybrid Technology

Future
Integrated Diesel/Gasoline Engines (HCCI): 2015?
Half cam or camless valvetrains: 2011?
 Electronic actuation of fuel injectors
 Ethanol (E85)
High gasoline prices and dependence upon foreign oil have renewed interest in ethanol
 Ethanol E85 is 85 % ethanol and 15 % gasoline
 Almost all NA OEMS have announced increased FFV vehicle production
 About 5MM FFV vehicles are on US roads with another 2MM planned by 2008
 Special fuel system, electronics,and “engine tuning” are needed for FFV vehicles
 E85 can be produced from corn or “cellulous” material
 E10 may be an option until sufficient ethanol production capacity is available

Challenges exist
 About 600 E85 Stations (< 1% of total fueling stations), but growing in the mid-West
 Ethanol production is approximately 3% of total gasoline production
 Lower fuel economy in real-word; higher FE window stickers. E85 has about 2/3 the
energy content of gasoline.

Chrysler has incorporated FFV requirements for emulsibility and

rust protection into current factory-fill and service-fill engine oil
specifications. High usage of E85 may require a shortening of the
oil drain interval.

Dodge Stratus Sedan

 Hybrids
“Mainstream or Bridge to the Future?”

Will consumers maintain

their interest in gasoline-
electric hybrids?

Source: HybridCars.com

North America hybrid vehicle sales continue to increase. Hybrid models accounted for
about 1.6 % of total vehicle sales in 2006. Full hybrid (ICE and battery can power wheels)
and mild hybrid (only ICE can power wheels) options are available.
 Plug-In Hybrids
OEM interest has renewed in “plug-in” hybrids. These are electric powered vehicles that
can re-charge their batteries by “plugging” into an electrical outlet at the consumers
home. GM’s E-flex system allows the vehicle batteries to be charged by either plug-in or
by a small on-board multi-fueled engine acting as a generator.

- Six hours of plug-in charging required.

Will the national grid handle the demand?
- Requires advancements in Lithium-ion batteries
rather than Ni-metal-hydride units. Battery pack
weight is 400 lbs. No estimate of life time given.
- 60 mile commute could avg. 150 mpg; 40 mile
commute could be all electric.
- Could be available in 3 – 5 years
- Nissan, Honda and others are investigating
plug-in hybrids.
 Compressed Natural Gas
The 2007 Honda Civic GX NGV is on-sale in California complete with it’s
own home re-fueling station, named Phill. Phill uses your home’s existing
natural gas line and one 110-V outlet.

- 1.8L 16-valve SOHC i-VTEC engine

- 220-240 mile range on a full tank
- California Natural Gas Vehicle
Coalition lists 140 public fueling and
200 private fueling locations.
- CARB AT-PZEV certified
Fuel Cell Vehicles

Ford Prototype FCV

Basic Fuel Cell Chemistry

Anode 2H2 => 4H+ + 4e-
Cathode 02 + 4H+ + 4e- => 2H2O
Net 2H2 + O2 => 2H2O
 Fuel Cell Vehicles
Fuel cells are electrochemical energy devices that use hydrogen to generate
electricity and water vapor (zero emissions)
 Proton Exchange Membrane (PEM) is leading technology
 It takes many, many fuel cells stacked together to generate enough
electricity to power a vehicle
 Hydrogen production & storage, fueling infrastructure, safety, cold
weather operation, fuel cell manufacturing and other technical hurdles
 Latest estimate of Fuel Cell Vehicles entering the market is 2020
• Honda has announced FCV vehicle to be on-sale by 2018 (~ $ 84,000 MSRP)
 Fuel cell vehicles will have major impact on engine oil demand – they
don’t need any !
- CARB has announced
a study to assess the
amount of air pollution
generated by engine oils
through non-tailpipe
(evaporative) emissions.
GM Sequel
Estimated study
Light Duty Diesel
Light duty diesel powers about 3 % of the 2006 US car and light truck fleet.
Despite diesel fuel prices remaining higher than gasoline, consumer & OEM interest
remains high:
 Light truck CAFE limit increases to 22.2 mpg and new on-highway diesel
emission regulations began in 2007
 Diesel engines can provide a 15 - 30 % fuel economy benefit
 Diesel offerings in full-sized trucks provide torque for trailer towing
 Ultra Low Sulfur Diesel Fuel is an enabler
 JD Power estimates diesels will be 10% of US market by 2015

Technical advances are greatly improving light duty diesel performance

 Common rail, high pressure direct injection fuel systems
 Variable geometry turbochargers
 Advanced engine management systems
 Diesel particulate filters
 NOx reduction technology
 US Lubricant Sales Data
45.00%
2005 NPRA Automotive Lubricant Sales Data % of Mkt
40.00%

Engine Oil Trans. & Hyd. Oils Gear Oils 35.00%

5%
30.00%

21% 25.00%

20.00%

15.00%

10.00%
74% 5.00%

0.00%
5W-20 5W-30 10W-30 10W-40 20W-50 Other

The National Petroleum Refiners Association estimates that automotive lubricant sales
decreased by 1.8 % to 1,464 million gallons (5541 MM liters).
Gasoline engine oil sales accounted for about 658 million gallons (2490 MM liters)
Almost all gasoline engine oils are ILSAC GF-4/API SM quality. SAE 10W-30 is the
most popular grade, though few vehicle’s recommend it. The average DI package treat
rate for gasoline engine oil is 9 – 10 wt %
Gasoline Engine Oil By Market Segment
Conventional mineral oil quality (mainline branded products)
 Bulk of engine oil volume sold. ~ US $ 2.00 per quart
Synthetic Blends
 Contain percentage of Group III or Group IV base stocks
 Offer improved low temperature pumpability and oxidative protection
Full Synthetic
 Contain all Group III or Group IV base stocks/ ~ US $ 5.50 per quart
 “Engineered” products provide excellent low temperature pumpability and
oxidative/thermal stability
 Meet select OEM & European performance claims
Specialty Products
 High Mileage Engine Oils
 4X4 and Racing Engine Oils
 Winter Blend Engine Oil
 ~ US $ 3.00 per quart
 Best Selling Motor Oils in Fast Lubes
The Do-It-For-Me (DIFM) installed market
6%
8%
Pennzoil is over half of all motor oil sales and
12% 29% Valvoline
Quaker State steadily growing at expense of the Do-It-
16% Castrol Yourself (DIY) market.
10% Mobil
12% 7% Havoline • Oil brand vs. Oil Changer Identity
Others
Shell
• Proper Oil Recommendations
Best Selling Motor Oil in Fast Lubes
• Influence Oil Purchased
• By 2009, it is estimated that synthetic and
Mobil 1
11% Castrol specialty oils will account for over 20 % of
4% Pennzoil total motor oil sold in fast lubes.
Valvoline
7%
Quaker St. • Average ticket price at installer is:
8% Others
60%
10% Conventional Oil US $ 28.60
Synthetic Oil US $
Best Selling Synthetic Motor Oil in Fast Lubes
50.00
Source: National Oil & Lube News January 2006
Engine Lubrication: Three Basic Drivers
Passenger Car / Light Truck engine lubrication requirements
continue to focus on three core areas:

Improved fuel economy & fuel economy retention

Improved emission system compatibility
Improved engine oil robustness to provide increased engine
durability

These requirements follow in step with changes in engine hardware

& technology to meet consumer & regulatory demands.
2007 NA OEM Engine Oil Recommendations*
Chrysler
 MS-6395Q Service Fill SAE 5W-20, 5W-30, & 10W-30
• ILSAC GF-4 plus TEOST 33C and tighter MHT limits, FFV emulsion and
humidity cabinet test and viscometric limits
• Oil marketers must submit data to Chrysler to claim on label
 MS-10725 Service Fill SAE 0W-40
• ILSAC GF-4 less strict FE limit or MB 229.3 performance
• For Viper and other high temperature applications
 MS-11106A Service Fill SAE 5W-30
• ACEA A3/B4/C3, MB 229.51 approved
• For light duty diesel applications equipped with DPF aftertreatment

Ford Motor Company

 WSS-M2C929-A Initial & Service Fill SAE 5W-30
 WSS-M2C930-A Initial & Service Fill SAE 5W-20
• ILSAC GF-4 plus tighter TEOST MHT-4 & additional Seq. VG requirements
 API CJ-4 SAE 15W-40 recommended for Powerstroke Diesel

* Most models. Consult owners manual for specific recommendations.

2007 NA OEM Engine Oil Recommendations*
General Motors
 GM 6094M Service Fill SAE 0W-30, 5W-30 & 10W-30
• ILSAC GF-4 plus better low temp. pumpability and equivalent ILSAC GF-3
seal compatibility
• Oil marketers must submit data to GM to claim on label
 GM 4718M Service Fill SAE 0W-30, 5W-30 & 10W-30
• High Performance (high temperature) applications
• ILSAC GF-4 plus tightened low temp. pumpability and Seq. IIIG performance
 API CJ-4 SAE 15W-40 recommended for DuraMax Diesel

Toyota
 Toyota Genuine Oil SAE 5W-30 preferred
 ILSAC GF-4 acceptable if Toyota Genuine Oil not available

Honda
 Honda Genuine Oil SAE 5W-20 preferred (most applications)
• ILSAC GF-4 acceptable if Honda Genuine Oil not available
 Honda HTO-06 specification for select high temperature applications
• ILSAC GF-4 plus high temp. deposit and revised fuel economy parameters
* Most models. Consult owners manual for specific recommendations.
 ILSAC GF-5 Draft Needs Statement
The International Lubricant Standardization and Approval Committee (ILSAC) GF-5 Minimum Performance
Standard must provide improvements in:
Fuel economy and fuel economy retention
Engine oil robustness
Protection of emission control systems
The final standard will have to result in a balance among these three equally important needs.
More specifically, ILSAC GF-5 oils must incorporate:
Increased fuel economy and improvements in both FEI retention and durability throughout the oil change interval relative to GF-
4. Automotive manufacturers are facing increasingly stringent CAFE requirements. Fuel consumption remains a critical issue
for automotive and oil industry customers.
Enhanced oil robustness throughout anticipated real-world usage demands for new and existing engines such as deposit control
on turbochargers and piston ring cleanliness while maintaining nitration and oxidation control. This is vital to contend with the
environment created in modern engines due to higher power densities, higher speeds, and extended oil change intervals practiced
by many owners. Piston ring belt deposit formation initiates increased oil consumption and amplifies exhaust emissions
especially at cold ambient temperatures. The introduction of cylinder de-activation systems and cam-shaft phasing demands
sufficient engine oil aeration control. Multi-fuel vehicle (MFV) fuel demands emulsibility capability and rust control. Increased
sludge protection is necessary to address low temperature sludge concerns associated with current market oils (i.e. GF-4, GF-3).
Requirements ensuring the compatibility of the GF-5 category with emission system components capable of meeting stringent
federal and California emission regulations. Phosphorus and sulfur are known catalyst and exhaust gas oxygen (EGO) sensor
poisons, which need to be controlled to meet current and future tailpipe emission requirements for the full useful life of the
vehicle A minimization of phosphorus impact and consistent sulfur content are necessary across the ILSAC viscosity grades.
It would be helpful to have a “best in class” GF-5 category demonstration oil to identify potential
performance trade-offs that may exist among the parameters. This oil could be used to
establish a holistic set of specification limits.
 Proposed ILSAC GF-5 Tests
Item Need Parameter Test
1 Low temp. corrosion Rust Ball Rust Test
2 High temp. corrosion Cu/Pb bearing leaching Seq. VIII
3 High temp. sludge Non-classic sludge TBD (Omitted from Needs)
4 Low temp. sludge Classic sludge Seq. VG (Tighter OSC)
5 High temp. deposits 285°C deposit weight TEOST MHT
6 Piston deposits WPD Seq. IIIG (Tighter Limits)
7 Used low temp.viscosity MRV Seq. IIIGA or ROBO
8 Oxidation protection Viscosity increase Seq. IIIG
--- Valvetrain wear protection Cam and Lifter Wear Seq. IIIG
9 Abrasive wear protection Soot induced wear TBD (Omitted from Needs)
10 Adhesive wear protection Scuffing wear Seq. IVA (Parts Available)
11 Catalyst compatibility Chemical limits 0.06 – 0.08 % P
12 Catalyst compatibility Phosphorus volatility ESCIT recommendation

Afton Perspective: January 2007

 Proposed ILSAC GF-5 Tests
Need Parameter Test
13 Fuel economy New & used fuel economy Sequence VID
14 Turbo protection Turbo coking TEOST 33
15 Oil consumption Volatility GF-4 tests
16 New oil viscometrics Viscosities J300
17 Shear stability Sheared viscosity Seq. VIII
18 Aeration % aeration, new & used HEUI (ASTM D6894) (?)
19 Foam Foam height and settling time GF-4 tests

20 Elastomeric compatibility Durometer, vol., tensile CI-4 seal test (ASTM D7216 ?)
21 Filter plugging protection % plugging GF-4 tests
22 H&M Additive dropout/update GF-4 tests (New reference oils)
reference oils
23 MFV compatibility Rust TBD; Additional test needed?
24 MFV compatibility Emulsibility TBD

Afton Perspective: January 2007

 GF-5 Time Line – September 2006
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0
ILSAC/OIL Committee Work
TEST DEVELOPMENTS
1) Vehicle Fuel Economy Testing
R&D of Correlated Engine-Dyno Test
Funding for Dyno Test Development in 2006 Done 3/06!
2) Emissions System Compatibility TF
3) Development of the IIIH
4) Soot Induced Valve-train Wear Test (RFWT?)
5) High Temperature Sludge (Tighter VG Limits?)
6) Sequence VG - Hardware for Continuation? Done 5/06!
7) Turbo Protection - TEOST 33 Correlation Work
8) Sequence VIII (New Storage Oil & New Bearings) ?
9) Obtain Sequence IVA parts for life of GF-5 (2015)
10) Development of ROBO for low temp pumpability needs
Desire is to have calibration oils from "GF-5 technology"
11) Introduce New Calibration Oils for Carryover Tests so older tests will utilize GF-5 lubricant technology

Desire is for companies to secure this funding in

their 2007 budgets for use in 2008 matrix
FUNDING OF PRECISION MATRICES
DESIGN OF PRECISION MATRICES
RUN PRECISION MATRICES
ASTM TEST ACCEPTANCE
RSI REGISTRATION BEGINS
TECHNOLOGY DEMONSTRATION
ILSAC/OIL APPROVE GF-5 SPEC
API MANDATORY WAITING PERIOD
API FIRST LICENSE DATE
API MANDATORY USE DATE
Future Drivers
Increased engine horsepower and torque will result in greater need for improved
oil robustness and high temperature deposit control
 Piston cleanliness and oil stress management critical for engine durability
 Turbocharger protection will be needed
Fuel economy improvement will continue
 Consumer demand exists for trucks/SUVs and higher power engines
 Light truck CAFE limit is increasing
 GDi, hybrid and light duty diesel engines may have special needs
Emission catalyst compatibility improvement will continue
 Specific components may be targeted (phosphorus & sulfur)
 Light duty diesel exhaust aftertreatment may have special needs
 Systems approach of fuel, lube, materials and hardware needed
Global engine design and manufacturing is now common
 Engine oil specifications will incorporate international requirements