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Transmission Trends


If you purchased a new computer last year and are already contemplating upgrades, youll appreciate the rapidity of technological advancement. The New and Improved tagline is not only expected and anticipated, but welcomed, as is the time and money these improvements typically afford us.

Automatic transmission fluids (ATFs) are no exception, with recent developments in the industry threatening to alter the landscape weve historically known. While its fair to say that the average consumer knows as much about transmission oil as he/she does about nuclear physics, anyone affiliated with the lubricants industry is attuned to even minute changes in OEM specifications and fluid requirements, as these changes represent technical, formulary challenges and costly research and development expense.

Our industry is poised to witness the launch of some of the best transmission fluids ever developed. Admittedly, these fluids may enhance inventory complexity, but they should be embraced wholeheartedly as they represent products that are first-rate for vehicles, consumers, marketers and the environment.

Afton Chemical estimates the size of the global, finished ATF market to be 260 million gallons a year, with usage varying widely around the globe. While most regions are anticipating relatively steady demand, the Asia-Pacific rim and China in particular are forecasting growth in automatic transmission fluids due to the growing popularity of automatic transmissions, catalyzed by technological innovations such as the six-speed automatic.

In Europe, manual transmissions continue to dominate (about 75 percent) in both the passenger car and commercial arenas. Growth is forecast in the automatic and double-clutch transmission types, particularly as Russia and Eastern Europe continue to strengthen their economies.

North America: ATFs Stronghold

In North America, the ATF market is segmented many ways, the simplest being the split between factory fill and service fill (aftermarket), with a total market size estimated at 170 million gallons. The data vary slightly year-to-year, but typically this splits into 30 percent factory fill and 70 percent service fill. The service-fill volume divides into 70 percent installed or do-it-for-me, and 30 percent retail/do-it-yourself.

Of these segments, factory fill holds the greatest technical challenge for additive formulators, as chemistry strives to achieve the ever-increasing standards targeted by original equipment manufacturers. An additional and equally significant challenge is a fluids ability to satisfy the requirements of new transmission designs while maintaining backwards compatibility.

Specifications in the past 12 years have undergone unprecedented upgrades, with record numbers of revision releases. As each OEM designs a transmission best suited for its drivetrains, the fluid requirements must align with and enhance the hardware design. Unique design and power optimization are the primary drivers behind the variance in fluid specifications from one OEM to another.

The OEMs have opted to redesign the transmission fluid such that many facets of the fluids performance parameters are improved – dramatically. Each enhancement or improvement in transmission fluid is fundamentally grounded in enhancing frictional durability, oxidation and wear protection, foam control and shift-feel performance. The design of the hardware-fluid combination is critical to the performance of the vehicle, and if you wish to market a fluid claiming the coveted OEM approval, your fluid must substantiate its performance by demonstrating capability in the rigorous bench, rig and field tests detailed in the specifications.

Complexity Grows

The recent launch of General Motors trademarked Dexron-VI specification, and the expectation that Ford may launch a next-generation version of its trademarked Mercon fluid as well, have created much speculation and consternation amongst ATF marketers. For decades, Dexron/Mercon fluid, meeting the specifications of both GM and Ford, has held the lions share of the ATF market, at roughly two-thirds of the total.

With the launch of Dexron-VI, all marketing segments and channels are contemplating the fragmentation of the U.S. and Canadian ATF market, and the potential increase in SKU and related inventory costs required to satisfy the variety of OEMs represented by the regions vehicle market.

There is much speculation as to whether there will be a Dexron/Mercon next-generation fluid, and whether or not it is feasible to create a global, multi-vehicle product incorporating the range of frictional requirements of GM, Ford and Chrysler with those of Toyota and Honda. To date, there is no single fluid that will meet the combined, latest requirements of the North American and Asia-Pacific OEMs.

Within specifications, there is sub-categorization; specifications are aligned with OEM vehicle models and years as fluids are designed to complement specific transmission designs and their associated friction materials. Simply stated, old, outdated or superceded specifications wont perform adequately in new vehicles, while newly released specifications are typically designed to enhance the performance of older vehicle transmissions. The average installer location will need to educate technicians on the proper fluid-vehicle combination, so as to avoid misapplication (such as using old-technology fluids in new vehicles), and its associated liability.

The pressures facing transmission fluid marketers continue to escalate, particularly for purveyors of legitimate, licensed quality products. As expected, these marketers are facing rising costs of goods, base oil supply challenges and a fiercely competitive finished goods marketplace.

What one wouldnt necessarily anticipate is the proliferation of reasonable facsimile products that can (and are) produced with less thermally stable base stocks and old-technology additive packages, the end result being products that cause shudder, poor shift performance, and limited fluid life. Coupled with the vagaries of trademark licensing guidelines and beguiled with cleverly crafted language, these look-alike products are indistinguishable to the untrained eyes of the average consumer, leading to the purchase of unknown and unproven quality.

Solutions Abound

Fluid marketers may be wondering, How can I possibly compete in this environment? How can I launch new technology products satisfying the needs of todays vehicles, while competing with companies who represent old technology as equivalent to new technology, when the consumer has no point of differentiation?

The solution, from Afton Chemicals perspective, is clear: As an industry, we must promote the benefits of the new fluids and all of their performance attributes. As an industry we must increase consumer awareness of the consequences of using old-fluid technology in new vehicles – shudder, erratic shifts and diminished fluid and transmission life.

We Americans, like drivers everywhere, are in love with our automobiles. Our selection of a vehicle reflects our individual personalities and ensures our mobility in a harried world. A person may choose a Ford vehicle over a General Motors model, or a GM car over a Chrysler for a number of reasons. But with our vehicle selection comes the responsibility to select the correct fluids specifically designed to keep the car operating at optimal levels.

We cant all be engineers, but we can purchase the engineering brainpower built into our automobiles and take the sage advice of the experts: Use the fluids specified and tested by the OEM at the intervals recommended. Recall that consumers (on average) know very little about the requirements for or performance of ATFs and quite frankly, they dont care. Convenience is valued, placing a higher degree of dependence on the oil change outposts – aka, the installer.

In our business, the installers unite the oil industry with the consumer in a controlled environment. As fluid experts, they are in a unique position to raise the stakes of the game, gaining the trust of consumers by educating them on the latest product innovation in the car-maintenance arena. The consumers fluid change experience becomes an opportunity to enhance credibility and respectability, in an industry plagued by negative media coverage.

Lets tout the newest products along with their consumer value. Lets give the consumer some credit for his savvy ability to make informed choices. The universally acknowledged you get what you pay for hits home at the consumer level if and when a vehicle malfunctions, creating unanticipated expense and inconvenience. Why not take advantage of an opportunity to educate and foster trust with our customer base?

Lets ensure that a typical car buyer gets the best fluid for his or her car, with the latest and greatest technology. Just as an API SA category engine oil is no longer appropriate for vehicles manufactured in the past four decades, neither is outdated transmission fluid. And new technology, with more bells, whistles and performance attributes, typically comes at a price. As an industry, lets create a quality buying experience – satisfaction guaranteed.

Yes, the transmission fluid industry is in for an exciting ride! Cutting-edge technology and innovative fluid development have become the industry standard. The recent and future specification upgrades are no exception, and there are no barriers to entry for getting in the game. Whether an independent oil marketer or a mass merchandiser, the opportunity to purchase, blend and/or market these fluids is open to you.

Thats not to say that the roadmap for product portfolio selection is clear. Strategic thinking, with actionable marketing plans, will surely play a role in defining a segments product slate. This is not a one-size-fits-all industry, as evidenced by the variety of options available. But one things for sure – technology will continue to evolve and change will continue to be inevitable.

For now, we must contend with the realities of the immediate future, namely, supplying the market with quality ATFs that adhere to the guidelines of specification and licensing as established by our industry.

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