Need to Know
The American Petroleum Institute (API) has long been viewed as the leading authority on motor oil standards. However, this prominent organization is now facing some challenges. To understand API’s influence on motor oil standards and the factors contributing to its challenges, it’s crucial to examine the historical context of automobiles and API’s involvement in establishing standards.
The United States is often regarded as the cradle of the modern automotive industry, primarily attributed to Ford’s revolutionary use of the assembly line, which led to rapid expansion in the number of cars on U.S. roads. In the early days of the automobile industry, performance standards for motor oil primarily focused on viscosity. In 1911, the Society of Automotive Engineers (SAE) established the first official standard for motor oil viscosities. Although SAE viscosity remains a critical measure, as the automotive sector expanded and engine technology advanced, manufacturers began seeking additional criteria to enhance engine protection and longevity. This led to the introduction of the API Service Classification system.
This API Service Classification system, with roots dating back to the 1920s, categorizes gasoline and diesel engine oils based on a wide range of performance characteristics. It provides a clear and user-friendly classification for both manufacturers and consumers, ensuring that motor oils comply with essential performance standards and are suitable for the vehicles they service. Subsequently, in 1993, API launched the Engine Oil Licensing and Certification System (EOLCS). This voluntary initiative enables engine oil marketers who meet specific criteria and adhere to aftermarket testing standards to license and sell products bearing the API Engine Oil Quality Marks. API imposes an annual licensing fee for licensed products on top of a royalty fee based on the volume of oil sold under the license.
While the U.S. was a pioneer in the automotive field and motor oil standards, the landscape shifted over time. By the mid-20th Century, the automotive industry had expanded internationally, with Europe and Japan emerging as major contenders. After World War II, German and Japanese manufacturers—including Volkswagen, Toyota and Honda—gained significant market share, challenging American automakers and providing consumers with additional options. As we entered the 2000s, the landscape further diversified, with China now recognized as the largest car market globally, alongside South Korea and India.
What began as a primarily American industry and the center for motor oil standards has now expanded into a global network of innovation, technological development and competition. During this transition, various organizations have emerged with new standards for motor oils. These standards were influenced by the need to address regional differences in fuel efficiency and emission regulations, variations in OEM power platforms, market shares and others.
The Comité des Constructeurs du Marché Commun (CCMC) is recognized as the first association outside of API to create motor oil standards, beginning in the 1970s. These initial standards were later replaced by those from the Association des Constructeurs Européens d’Automobiles (ACEA).
Established in 1991 by a coalition of European automotive manufacturers, ACEA is dedicated to developing motor oil standards for passenger vehicles and diesel truck engines produced by European OEMs. Since the launch of the first ACEA Oil Sequences in 1996, 11 additional standards have been introduced. These standards often exceed API’s requirements for engine protection and extended oil change intervals. While many motor oils in Europe comply with both API and ACEA standards, a significant portion of lubricants must also adhere to key OEM specifications, which often take priority over industry standards. Despite this, ACEA remains a dominant force in Europe, while API has minimal impact on the European market.
The Japan Automobile Manufacturers Association (JAMA) has also established itself as a key organization in motor oil standards. In 1992, JAMA partnered with Ford, General Motors and Chrysler to form the International Lubricant Standardization and Approval Committee (ILSAC). This committee works closely with OEMs from Japan and the U.S., often collaborating with API to develop standards that prioritize fuel efficiency and emission reduction in gasoline engines. JAMA typically aligns with the standards set forth by SAE and ILSAC. A notable specification is JASO GLV-1, which includes SAE 0W-8 and 0W-12, grades that are not recognized by ILSAC but can be licensed as API products.
The market dynamics surrounding API standards became even more complex when various OEMs—including Toyota, BMW, General Motors, Honda, Ford, Mercedes, Volkswagen, Mack, Caterpillar, Cummins, Detroit Diesel, Renault Trucks, Man, Daimler and others—developed standards, testing methods and certification programs for the oils considered vital for protecting their unique technologies and customer bases.
General Motors’ dexos stands out as one of the most influential OEM standards. Introduced in 2009, dexos marked a significant departure from established API standards and challenged API’s market position. By meeting and exceeding API’s standards, dexos established itself as a new benchmark for motor oils in the U.S., primarily due to GM’s substantial market share and the need for installers to maintain bulk inventories of oils that met the needs of the highest number of customers. Similar to API, GM requires an annual licensing fee for approved products and a royalty fee based on the sales volume of approved oils. It’s important to recognize that the fees and royalties imposed by GM and other OEMs for lubricant approval can significantly increase the expenses associated with the development and marketing of a specific lubricant. The extensive approval processes often exceed the basic API or ACEA standards, adding to complexity and cost.
The rise of ACEA, JAMA and OEM standards, alongside API, suggests that the criteria established by API don’t fully address the need for motor oil standards to accommodate all the demands of advanced engine technologies, regional differences in vehicle types and market shares, power platforms, regulations, consumer preferences, quality oversight and more. Additionally, critics contend that the emergence of new standard organizations is a result of API not keeping up with contemporary engine advancements and favoring general market consensus over innovation.
Despite facing challenges, API has made significant contributions to the organization of the motor oil industry and the protection of consumers over time. The API Service Classification system has also evolved into a globally recognized standard and supplies many of the engine tests used by these other specifications. However, sustaining this effort in a global marketplace is a daunting challenge, particularly given differences in performance requirements among OEMs and regions, as well as economic factors.
While API is likely to maintain its status as a key authority for baseline motor oil standards, it is crucial to recognize the implications of analogous sectors like pharmaceuticals, food and beverages, consumer electronics and electrical equipment. In these industries and others, products that initially followed U.S. quality standards have adapted to meet global standards. This shift was driven by factors like international trade, regulatory harmonization, technological innovation, and the financial implications of marketing products that must satisfy redundant and sometimes contradictory specifications.
Given that similar dynamics are influencing the lubricants industry, it’s expected that conversations are arising about China’s plan to create its own standards. At the same time, the International Fluids Consortium (IFC) has established a worldwide coalition comprising 14 prominent OEMs, additive producers and industry advocates to promote the advancement of global specifications.
Throughout its history, the lubricants industry has shown that many organizations and stakeholders are instrumental in determining motor oil specifications. Any changes to these specifications must be carefully assessed, as they can lead to unintended outcomes, including increased complexity, confusion and costs. Past experiences demonstrate that products sold based on specifications are vulnerable to commoditization. They often lose differentiation over time as more competitors meet or exceed readily accessible specifications. This leaves little room for uniqueness, leading to intense competition, price erosion and diminishing brand loyalty. It’s a natural outcome of market evolution, driven by technological advancements, consumer preferences and competitive forces. But the shift toward commoditization, particularly in the declining PCMO market, presents serious issues that can have negative consequences for lubricant suppliers and buyers.
Tom Glenn is president of the consulting firm Petroleum Trends International, the Petroleum Quality Institute of America, and Jobbers World newsletter. Phone: (732) 494-0405. Email: tom_glenn@petroleumtrends.com