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In our March issue, I described General Motors new engine oil specification, which at the time was known as GEOS. The automaker has since refined and finalized its proprietary specification, and renamed it dexos – a trademark it prefers to spell with a lowercase d.

As expected, GM actually issued two specifications: dexos 1 for spark-ignited engines (part number GMW15827), and dexos 2 for light-duty diesel engines (GMW16095). The latter is about to launch in Europe, but the version North American lubricant manufacturers and marketers will grapple with, starting with GMs 2011 model year vehicles, is dexos 1.

GMs reasoning for the new standard is that it will allow it to consolidate its global engine oil needs from a current 20 specified products down to just one. It also believes that it will help the move to more fuel efficient oils with longer drain capabilities, thus improving the environment.

Now that dexos 1 is out, the reaction from the oil marketplace has been swift and very critical. There are a number of issues that stand out in the discussion. ILSAC GF-4, the current standard, has been in the market since 2004 and has become the primary oil specification for most gasoline-fueled engines in North America. The industrywide effort to improve GF-4 has been going on almost from the moment that it was introduced. The next upgrade, GF-5, is barely a month away from being approved by the oil and auto industries, with a planned commercial introduction in October 2010 – just when dexos 1 will become active.

Given that GF-5 and dexos 1 become active at about the same time, oil blenders and marketers now have the dilemma of whether to change their mainline products to meet GF-5 or dexos 1. Quick-lube operators have the additional problem of deciding how to handle both oil specs simultaneously.

Going back to the 1960s, original equipment manufacturers and oil sellers alike were concerned about the proliferation of oil types and their impact on marketing logistics and oil quality. Oil quality at that time was defined by brand name. The major oil marketers held an advantage in the market because of their brand identity.

With the introduction of the American Petroleum Institutes engine oil categories, a single, clearly identifiable designation gave consumers the ability to choose their oil with some degree of certainty that it was of sufficient quality to meet basic OEM requirements. However, when the current API system of engine oil categories was first developed, there were some in the ranks of oil marketers who declared that it would mark the end of competition, reduce margins and commoditize oil.

Of course, API is a major force in this situation. It has spent many years and dollars to establish the engine oil standards published as Document 1509. Would the oil industry abandon this system if OEMs begin developing their own oils? Based on the European example of OEM-approved oils that meet appropriate ACEA requirements plus additional tests. I don’t think so. It may well be that the API system could be used in similar fashion.

Officially though, API engine oil manager Kevin Ferrick says that APIs Lubricants Committee does not support dexos 1 for at least the following reasons:

1. The increased cost to API members, nonmembers and licensees.

2. Consumer confusion about the oil required for GM vehicles.

3. The multiplication of engine oil specifications.

Each of these points negatively impacts the standardization effort that most automobile manufacturers and oil companies support through ILSAC and APIs engine oil licensing system.

If dexos 1 proves to be successful, what will the other OEMs do? It is entirely possible that each of the major auto manufacturers will opt to have its own oil, with its own spin on whats important. The API system would be in danger of being abandoned – a case of deja vu all over again, as Yogi Berra would say. If you go back to the mid-60s, most of the American auto companies had unique engine oil requirements. There was a Ford product called Rotunda Oil, and a Chrysler product known as Mopar (a brand still in use). GM didnt have a product until the 1970s, which it called Mr. Goodwrench.

Its difficult to judge if the OEMs will again opt to introduce their own engine oil specs, or continue to use API categories. It seems very likely that they will watch the progress of dexos 1 very carefully – and if it does appear to be successful, they might well be encouraged to do their own take on the theme.

There are those who believe that the cost of creating and licensing dexos 1 is exorbitant relative to GF-4 and GF-5, which are licensed by API. These observers point to added tests and pricey components which they say will be needed to meet the specification. Dire predictions of a 30 percent to 50 percent cost increase in the additive package alone have been tossed around, due to the anticipated use of molybdenum based friction modifiers.

While the total cost of dexos 1 will be significantly higher, it will not be due to additive componentry alone. The use of API Group II, II+, III and even IV base stocks will have an impact on the finished oil costs as well. History has shown that each category improvement has resulted in some cost increase, usually due to new additive technologies or increases in additive treat levels. Since the mid-1990s, the tightening of volatility limits has added costs also for base stock improvements. So performance increases due not only to additive technologies but also to base stock changes will adversely affect costs.

The dexos 1 specification does not identify any base oil interchange (BOI) or viscosity grade read-across (VGRA) guidelines. The base oil parameters for the spec seem very likely to require a significant portion if not total use of Group III and/or Group IV base stocks, neither of which is cheap or plentiful. The lack of BOI and VGRA could be another major source of costs and delay in product approvals for dexos 1. The interchange and readacross system provides a means of approving multiple base stock formulations without wasteful and repetitive testing, and has a material impact on engine oil cost and availability. But these guidelines cost many years and millions of dollars to develop, all of it borne by oil companies.

When LubesnGreases asked if the API Lubricants Committee was helping GM set BOI and VGRA guidelines, the responsewas a curt no. However, Tom Read, a spokesman for GM Powertrain, said the automaker will work with individual applicants on BOI/VGRA questions to keep additional testing to a minimum while still ensuring the integrity of the dexos 1 product that our customers are using. He pointed out that the dexos specs say, It is GMs intent that the product actually supplied under this specification, i.e. the final formulation, will have passed all of the requirements defined herein. In the event that GM does not agree with the suitability of any read across, base oil interchange, minor modification, or other change tothe candidate oil formulation, GM reserves the right to require additional testing.

Questions have also been raised about the legality of requiring the use of dexos 1 in GM vehicles. The Magnusson Moss Warranty Act requires that if a specified aftermarket product is tied to its warranty, that product must be provided for free by GM. One quicklube owner, Scotti Lee of Oil Change Express in New Castle, Del., would like to see Congress intervene and block the introduction of dexos 1. In a letter to his senator, Lee wrote, The reality of GMs plan involves a scheme to generate ancillary cash flow by connecting consumer warranty requirements to an expensive proprietary product that would … increase product management burden for the entire motor oil distribution chain.

Lee told LubesnGreases that he doesnt believe dexos is needed, and said quick-lube operators fear other OEMs will follow a similar path, creating a major inventory headache. Contacted by Lee, Delaware Sen. Thomas Carper in August formally requested the Presidential Task Force on the Auto Industry to look into the environmental impact of dexos, and the added costs it would bring to consumers and oil installers.

That concern is underscored by the fees being imposed by GM for dexos 1 licensing – a real hot button for oil marketers. Under the dexos 1 specification, a successful formulation would be assessed a $1,000 annual licensing fee for each product approved. On top of that will be a royalty of 36 cents for each gallon of dexos licensed oil sold. This is obviously a cost that will translate directly to the end user.

Marketers who offer dexos 1 will certainly see lower oil sales, since it is designed for longer drain intervals. GM has indicated that its Oil Life Monitor will be recalibrated to take advantage of the improved quality of dexos 1. The monitors current settings result in oil change intervals ranging from 5,000 miles (based on my own experience) to more than 10,000 miles. Longer intervals will obviously have a negative impact, insofar as oil volume is concerned.

According to the 2009 Fast Lube Operators Survey published by National Oil and Lube News, vehicles equipped with on-board oil monitoring systems already go an average 15 percent longer between changes than those changed by mileage alone. The survey also showed that about half of the vehicles serviced in quick lubes have the OLM or similar system. There can be no doubt that oil sales will go down.

These are the major issues that have surfaced for the lubricants industry. Obviously, dexos will have a major impact on engine oil sales into the future. Without a plan, oil marketers are faced with some pretty tough sledding. However, have faith and remember every cloud has a silver lining.

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