Chrysler Launches ATF Licensing Program


The Chrysler Group on Monday announced that it will begin licensing its trademarked automatic transmission fluid specification, ATF+4, for commercial and retail sales. The program, scheduled to launch Sept. 1, opens the door for lube blenders and marketers to supply a product that until now was available only through Chrysler dealerships.

Chrysler officials said they took the step out of recognition that many customers were using unlicensed, imitation fluids from outlets other than dealerships.

The benefits of licensing our ATF+4 product will allow the millions of Chrysler Group owners with vehicles still on the road to receive transmission fluid that is designed exactly for their vehicle, said Dennis Florkowski, senior specialist/supervisor of Chrysler Fluids Group.

Chrysler has drawn criticism from lubricant blenders complaining about being shut out of the business of supplying Chrysler automatic transmission fluids,and from quick lube operators objecting to the high costs that Chrysler charged them. The Independent Lubricant Manufacturers Association, which lodged a complaint with the U.S. Federal Trade Commission two years ago, expressed cautious optimism about the new licensing program.

Its clearly a positive step, given where we have been with Chrysler on this issue, ILMA Legal Counsel Jeffrey L. Leiter told Lube Report. He added, though, that the association is still gathering information to determine if the programs requirements make licenses impractical to obtain.

Chrysler introduced ATF+4 as a high-performance, backward compatible, synthetic transmission fluid in 1998 and since then has used it for factory fill in new vehicles and recommended it for service fill in all DaimlerChrysler vehicles. It can be formulated with Group III and polyalphaolefin base stocks. The previous specification, ATF+3, while not a licensed product, continued to be available through approved manufacturers. Beginning Sept. 1, however, the automaker plans to phase out ATF+3.

The new licensing program differs from ATF programs employed by other U.S. automakers. First, it is administered by an independent business, the Center for Quality Assurance, a division of Savant Groups Institute of Materials in Midland, Mich. Second, it delineates two tiers of licensing – one for rebranders and another for blenders. Companies that want to package fluid formulated and manufactured by licensed blenders must first submit a product sample, including label, to CQA for laboratory testing. If the sample passes, the would-be rebrander then submits an application for its license, after which it receives a visit from CQA. CQA conducts inspections to check that facilities for delivery, handling and process controls are adequate.

Rebranders pay an annual fee of $5,000 for their license, plus testing costs. CQAs director, Rebecca Cox, said the latter should amount to less than $100. CQA will also conduct periodic follow-up field sampling and testing at no charge to licensees to ensure that products continue to meet the programs requirements.

The process for becoming a licensed blender is much more extensive, Cox said. Applicants must undergo a wide range of tests to verify that their blending capabilities meet ATF+4 specifications. Blenders bear the costs of these tests, plus a $5,000 licensing fee and an additional fee of $1 per gallon of ATF+4 that they sell.

Cox said Chrysler and CQA expect that most initial interest in the program will be for rebrander licenses and that costs for blender testing have not yet been determined. She did say those costs will be significant.

Lubrizol is currently the only additive company with approved formulas for the specification. Other additive companies could seek their own approvals, Cox said, but would face considerable field and laboratory testing and expense.

Chryslers announcement said it moved to licensing in response to marketplace demands and evolving vehicle technology. Florkowski said this referred largely to the fact that many owners of Chrysler vehicles buy replacement fluid from stores or independent repair shops, rather than dealerships.

There are a significant number of products popping up out there that claim to be equivalent to ATF+4, Florkowski said. We have had issues with the verbiage on labels for those products. In addition, weve conducted tests on them, and our experience has been somewhat negative. Considering all these factors, we felt it was incumbent on us to take steps that would help customers obtain fluids that match our high standards of quality.

Florkowski acknowledged that ILMAs campaign was also a factor in the adoption of the program. Im sure that had some impact, he said.

Filed in November 2003, the associations complaint argued that Chrysler engaged in unfair trade practices by not making the ATF+4 specification available to independent suppliers. ILMA also complained about a Chrysler policy of supplying the fluid to dealerships only if they agreed to buy Chryslers Mopar motor oil. The association claimed the latter practice steered motor oil sales away from ILMA members.

In the same month, the Automotive Oil Change Association lodged a complaint about Chryslers policy of requiring quick lubes that wanted ATF+4 to buy it from Chrysler dealers at nearly four times the prices that those dealers paid – and at a price that was nearly nine times the going bulk rate for standard automatic transmission fluid.

The Federal Trade Commission denied the complaints of both organizations last summer.

While praising the implementation of a licensing program in concept, ILMA said it is eager to see how it works in practice. Leiter said he has asked member companies for input about whether the $5,000 licensing fees are prohibitively high.

The fees should not act as a barrier to entry, he said.

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