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ATFs Shift into Overdrive

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Fluid is the key word in todays automatic transmission fluid market – fluid as in change. Driven by legislative mandates and developments in transmission design, ATFs have changed rapidly and dramatically the past few years. Part of what has happened is that better performance is being demanded of fluids – a trend that is familiar in motor oils and other corners of the lubricant industry. But its not just that standards have toughened. The number of standards in the market has increased, and complying with them is becoming procedurally more difficult, at least in some cases.

It all adds up to changes in basic aspects of the way that fluid marketers do business. Base stock types that once served as their primary ingredient are being phased out. Products that now carry both of the two most popular ATF trademarks will soon be limited to one or the other. Qualifying under automaker licensing programs appears to be becoming more expensive and difficult.

Moreover, there is no indication that the upheaval will abate anytime soon. To the contrary, market observers say the trends behind it – heavier vehicles, increased horsepower and more government mandates – will probably continue for the foreseeable future. One is almost tempted to call it automatic.

Gale Warnings

Observers agree that automatic transmissions, as well as the fluids that fill them, have been evolving at an accelerating pace in recent years. They cite two main causes: government regulation and global competition in the automobile market. The former amounts to mandates to improve fuel economy and reduce air pollutants. The latter has spurred carmakers to work harder to appeal to customer preferences, including driver desires for better vehicle performance.

There has been a huge impact from the overall globalization of the auto market and the proliferation of models, said Robert C. Richardson, manager of Lubrizol Corp.s Equipment Manufacturers Group in Houston. Somebody wants the perfect sport utility vehicle, somebody else wants the perfect hybrid, and on down the line. These days, automakers cannot afford not to give customers what they want. That requires a lot of changes, and some of them affect transmissions.

Indeed, one of the ways that automakers are meeting those challenges is by equipping vehicles with new types of transmissions. This certainly affects transmission fluids, but let us set it aside for the moment. There have been plenty of new developments even for traditional four- and five-speed automatic transmissions.

On one hand, carmakers increased horsepower and torque levels in recent years to give customers the acceleration and vehicle responsiveness they want. While true of the auto market in general, this trend was especially pronounced in SUVs and pickups, which now account for roughly 40 percent of new passenger vehicle sales in the United States. SUVs and pickups require extra horsepower because they weigh more, and to accommodate recreational uses like towing. According to Lubrizol, horsepower in this category rose 93 percent between 1981 and 2003.

Meanwhile, pressure for better fuel economy spurred a push toward more aerodynamic design, leading to more compact transmissions, reduced sump volumes and less airflow to help cool transmissions.

Taking the Heat

The combination of these trends resulted in higher energy densities inside transmissions and faster fluid turnover rates. This raised temperatures and increased shearing action, creating needs for improved high-temperature performance and more shear and oxidation stability. Carmakers also ratcheted low-temperature fluidity requirements to improve fluid performance in cold temperatures.

At the same time, the auto industry stretched fluid drain intervals, striving for a fill-for-life ideal even as the lifespan of vehicles lengthened. Today carmakers typically prescribe ATF change intervals of 100,000 miles for normal service conditions and 50,000 for severe service. To last that long, fluids require even more shear and oxidation stability.

Formulators have employed better additive technology to meet shear stability requirements, but had to use better base stocks for low-temperature and oxidation stability. Specifications by a number of vehicle makers had already restricted base stock options before GM introduced its Dexron-III(H) upgrade in mid-2003. That standard effectively required formulators to use Group II base stocks or better, according to Katherine M. Richard, senior research chemist with Infineum USAs Power Transmission Fluids division in Linden, N.J.

Dexron-III(H) moved the required performance to levels unattainable with conventional antioxidant technology in general-market Group I base stocks, Richard said during a March 15 presentation in San Francisco at the annual meeting of the National Petrochemical and Refiners Association. The implications of this change were much more significant than those of the other high-performing ATFs due to the widespread usage of Dexron-III licensed ATFs.

Just two weeks after Richards presentation, GM unveiled another upgrade, Dexron VI, which reportedly requires Group III oils or a blend of Group II+ and Group III.

How Many Ts in ATF?

As mentioned earlier, automakers have also introduced a variety of new types of transmissions. The traditional four-speed and five-speeds introduced in the 1990s are still by far the most numerous types of automatic transmissions on roads today. But several others can now be found in the market: continuously variable transmissions (CVTs); dual-clutch transmissions (DCTs); automatic manual transmissions (AMTs); and six-speeds. Some OEMs are even developing seven-speeds.

Though different in design, the newer types all transmit power more efficiently than four- and five-speed automatics – and therefore offer improved fuel economy. According to Lubrizol Corp., four-speed automatics operate at a bit under 85 percent efficiency, five-speeds at just over 85 percent. CVTs approach 90 percent, while six- and seven-speeds both exceed 90 percent, the company says. Dual clutches and automatic manuals top 95 percent. Automakers say the newer transmissions also perform better, shifting more smoothly and responsively.

But different types of transmissions also have different fluid requirements. CVTs use steel-on-steel contacts instead of matching steel to fiber as other automatics do. DCTs and AMTs do not employ torque interrupters used in other types. Six-speeds are said to require fluids that can accommodate more precise shift ratios.

General Motors gave the market an example this spring of what can happen when an automaker introduces a new type of transmission. The company this year is launching the first six-speed in its venerable Hydra-Matic series, and it developed Dexron VI to define the fluids that will be used in them. The fluid it is supposed to replace – Dexron-III(H) – is just two years old, but officials said they needed a new fluid for the new transmission design.

With this new transmission, we have to be much more precise in our lubricant performance, said Steven Kemp, engineering group manager for GM Powertrains Fuels and Lubricants Department in Pontiac, Mich. Without that improvement, you could have inconsistent shifts, and that could potentially detract from customer satisfaction.

Splitting Headaches

Requirements for Dexron VI are significantly tougher than other major ATF specifications. But market observers say that one of the biggest impacts from Dexron VI will be the way it relates to other specifications – or rather, its failure to do so. Until now, fluid marketers have benefited from an overlap between Dexron and Fords ATF specification, Mercon. Up to and including their latest iterations – the current main line spec in the Ford program is Mercon V – requirements had been similar enough that individual fluids could qualify as both. Formulators had to undergo testing to gain approval for both standards, but then had the convenience of being able to market a single product to users of both.

This was especially helpful given the widespread use of both Dexron and Mercon. According to the National Petrochemical and Refiners Association, U.S. sales of fluids carrying Dexron-III and Mercon licenses totaled 96.6 million gallons in 2003, accounting for 54 percent of the market. The new Dexron standard, however, breaks the link with Mercon. Dexron-III(H) and Mercon V both required fluids with kinematic viscosities of at least 6.8 cSt at 100 degrees C. Dexron VI has a viscosity cap of 6.8 cSt.

Basically, the viscometrics alone have split the programs, said Infineums Katherine Richard.

Observers expect more of the same from other auto manufacturers. Sources said Ford is developing a new Mercon spec for its own six-speed automatic, which it plans to begin installing in 2008. (Ford officials could not respond to a request to comment for this article.) Toyota, Volkswagen, Jaguar, Volvo, Mercedes Benz and BMW all unveiled new fluid specs within the past two years, and further upgrades are projected to proceed apace in the future. But automakers may also begin using multiple specs to the extent that they employ multiple types of transmissions. Ford did this last year in launching its Mercon SP standard for new high-torque five-speeds built by German manufacturer ZF for limited use in light trucks.

The trend is reinforced by the growing popularity in the United States of cars manufactured by foreign companies. Unlike the Big Three, Japanese and European carmakers generally use genuine oils for transmission fluids and advise their customers to do likewise. Genuine fluids are blended for OEMs themselves and sold by them under their own name or brand through dealerships and maintenance shops.

Familiar Forecast

All of the forces pushing toward tougher ATF standards and market segmentation appear likely to persist for the foreseeable future.

In addition to an ever-increasing number of vehicle models, the trend toward higher power and greater performance does not seem to be abating, Lubrizols Robert Richardson said. The growth in vehicle models is primarily in sports and luxury car segments, in addition to SUVs. Horsepower and weight are greatest in these market segments, and thermal management challenges will be paramount.

He predicted that new developments in automatic transmissions will also continue. Current global transmission market trend data suggest the rate of change to a higher number of speeds and/or alternate transmission types is set to continue. In fact, many market analysts and commentators are suggesting that current [OEM] production forecasts are conservative in terms of the adoption of newer transmission technologies, and anticipate the rate of change to be even greater.

John Sunne, Afton Chemicals director of original equipment manufacturer liaison in Southfield, Mich., summed things up more succinctly. In the future, well probably have a whole slew of approvals for the ATF market.

U.S. automakers have generally not employed genuine oil systems, opting instead for licensing programs such as Dexron and Mercon. This approach probably owes in part to the fact that genuine programs frequently lead to exclusive supply arrangements, which U.S. fair trade authorities generally frown upon. In addition, American automakers have maintained that the competition inherent in licensing programs helps ensure quality while minimizing prices.

The Real Thing

Nevertheless, fluid suppliers contend that the U.S. market is moving closer to the genuine system – or something close to it. They cite developments with several current specifications. BP reportedly has an exclusive supply agreement for Allisons TES-295. DaimlerChrysler licenses production of fluids meeting its ATF+4 standard, but allows the product to be sold only under its Mopar brand. Market sources say there appear to be hurdles to supplying Mercon SP, as well.

Some predict it will be difficult to be in the Dexron VI business, too. GM developed the fluid in cooperation with Petro-Canada and Afton Chemical Co., which currently owns the only chemistry approved for the specification. GM insists that its program remains open, although Afton has responsibility for selling licenses to use its chemistry. Indeed, Afton said it has already issued licenses to two fluid marketers other than Petro-Canada.

Other additive companies may seek approvals for their own formulas, but Dexron VI also has a requirement that any company seeking a new approval conduct a series of tests to show that its formula is compatible with previously approved formulas.

Opinions vary as to whether the evolution of the ATF market favors fluid suppliers. Some contend that segmentation will create logistical complications, and that tougher specifications, licensing hurdles and general complexity will raise costs of competing in the market. Others argue that the establishment of narrower sub-markets of performance-based fluids gives marketers opportunity for better margins.

The number of fluids and complexity would indicate a less attractive market for fluid suppliers, Lubrizol product manager Ed Konzman said. But he added, Although the AT market is becoming more segmented and the fluids are more expensive, these engineered fluids provide a unique performance to a specific transmission. It should give the fluid marketer an opportunity to differentiate and sell the fluid based on performance, which leads to higher margins.

There seems to be no disagreement that newer ATFs perform better and that drivers will reap clear benefits, provided they use the proper fluid. To the extent that fluid suppliers themselves are part of the motoring public, that idea provides a bit of solace as they strive to keep up with the changes roiling their market.

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