ATF Market Trends Understanding the ATF...

ATF Market Trends –Understanding the ATF 

AftermarketKennon Artis, Afton Chemical

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Who Am I?Kennon Artis

• ATF Marketing Manager, North America– Position and promote ATF additives, coordinate with regional and global team 

members

• Background– Non‐chemical– CPG Marketer: Military, Procter & Gamble, Capital One, Business Owner

97

Global presence $2 B turnover

~ 1,650 employees

Afton Chemical has been a key

player in the lubricant and fuel additive industry for more than 85

years

Formed in 1924 as the Ethyl Gasoline Corporation

Newmarket Corporation formed in July 2004

1924 Present

Who Are We?

Objectives & AgendaObjectives

– Share latest ATF market trends– Discuss Technical Imperatives for Using Vehicle‐Specific ATFs

• Key Market Drivers

• OEM Approaches

• Automatic Transmission Hardware Dynamics

• Automatic Transmission Fluids and  Trends

• Market Dynamics & Enforcement

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The Backdrop

Government Regulations• Exhaust emissions• Fuel economy

Globalization• Applicability across regions• Broad platform varieties

Overall AT System• Durability• Reliability

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Fuel Economy – Pass. Car Requirements

Emissions & Fuel Economy ‐ Global Drivers

Improve Fuel 

Economy

Change Engine Design

New AT Designs

•6+ speed planetary AT

•CVT•DCT

Many & New ATF’s

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OEM Market Approach

103

OEMs Set the Pace for the ATF Market

• More types of vehicles / fluids• Proliferate unique OEM Requirements• More types of vehicles / fluids• Proliferate unique OEM RequirementsMulti- Vehicle ATF

• Advances / Changes in Hardware• Lower viscosity fluids• Advances / Changes in Hardware• Lower viscosity fluidsFuel Economy

• ‘Fill for Life’• Improved fluid durability -- high quality

ATFs

• ‘Fill for Life’• Improved fluid durability -- high quality

ATFsExtended Drain

Intervals

Impact of Transmission Trends on Fluids

• More types of vehicles/ fluids• Unique OEM Requirements• More types of vehicles/ fluids• Unique OEM Requirements

Multi‐Vehicle ATF

• Advances / Changes in Hardware• Lower viscosity  fluids (< 6 cSt @ 100°C)

• Advances / Changes in Hardware• Lower viscosity  fluids (< 6 cSt @ 100°C)

Fuel Economy

• ‘Fill for Life’• Improved fluid durability• ‘Fill for Life’• Improved fluid durability

Extended Drain 

Intervals

ATF Industry Trends Affect OEMs• Fuel Economy - Tremendous pressure to deliver

– Hi-priority at all OEMs– Government-levied fines get OEMs’ attention

• OEM transmission designs are more demanding on ATFs– Higher torque– Smaller transmission sumps

• Establish ATF specifications

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ATF Industry Trends Affect OEMs• Reliance on additive / oil companies -

– Formulations that enable the use of new hardware to improve fuel efficiency

• Stable viscometrics• Synthetic/high quality base oils

• Two Paths to Greater Fuel Economy– Hardware development– ATF optimization

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Hardware Dynamics

OEM Transmission Specifications

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OEMs prefer unique ATFs

Vehicle Type

Performance Parameters Regulatory 

Requirements

Vehicle Size

To ensure  consistent quality, OEMs license their ATFs

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New Transmissions Breakdown - NA

75%

80%

85%

90%

95%

100%

CY2014 CY2017 CY2020

Red

MT

EVT

CVT

Step

Source: IHS

Share of Units

Step and CVT transmissions will remain the dominant platforms in NA

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3-4-5 speed

AT37%6-7-8

speed AT

50%

DCT5%

CVT8%

201520 M units

3-4-5 speed

AT72%

6-7-8 speed

AT

DCT2%

CVT6%

201018 M units

20%

North America Hardware Production

Source: Afton Estimate

Ford and GM will jointly produce 9- and 10-speed transmissions beginning with the 2017 model year.

ATF Market Complexity Increases

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2012 U.S. Auto Sales

• Top 3 comprise 50% of sales• Top 7 comprise 80% of sales 

Source:  Wards Auto

Fluid Trends

ATF Components

Base OilBase Oil

80‐90%80‐90%

Viscosity & Low temperature fluidityViscosity & Low 

temperature fluidity

Oxidative StabilityOxidative Stability

Seal CompatibilitySeal Compatibility

Additive PackageAdditive Package

5 to 10%5 to 10%

DispersantsDispersants

Protection: EP, Wear, Corrosion, Foam, 

Oxidation

Protection: EP, Wear, Corrosion, Foam, 

Oxidation

Friction modifiersFriction modifiers

Seal swell agentsSeal swell agents

Viscosity Index Improver

Viscosity Index Improver

5‐15%5‐15%

Viscosity & Low Temperature fluidityViscosity & Low 

Temperature fluidity

Affect Operability Temperature RangeAffect Operability Temperature Range

Shear StabilityShear Stability

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What is an ATF?

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Additive Component: Dispersant

Role of Dispersants

Good Poor

Additive Component: Friction Modifier

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Friction

µ too high  shudder, harsh launch or stall, parts damage

µ too low  slipping, heat, parts damage

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µ = coefficient of frictionFriction can be estimated and empirically calculated, but not measured. 

Anti‐wear / Extreme Pressure Agents

Hardware Dependent Fluid Characteristics

Oil Pump / Valve Assembly / Torque Converter• Hydraulic fluid• Foam & aeration control

• Flow at low temperatures

• Protect sealsPlanetary Gear Set• Wear protection• Corrosion inhibition

Clutch Plates & Bands• Friction control• Friction durability• Dissipate heat

Electronics• Harness compatibility

• Conductivity

AT Control Body

Poor Quality ATF Good Quality ATF 

Good quality ATF provides sufficient protection against oxidation, minimizing carbon and varnish deposits and sludge to keep the control body clean to avoid plugging of small orifices that the fluid must pass through.

AT Forward Clutch Housing

Good Quality ATF Poor Quality ATF

AT Forward Clutch Piston

Good Quality ATF Poor Quality ATF

Internal AT Metal Part

Good Quality ATF Poor Quality ATF

Foam Control

Poor Quality ATF Good Quality ATF

Wear Protection

Good Quality ATF Poor Quality ATF

Low Temperature Performance

Poor Quality ATF

Good Quality ATF

Complexity of Fluid Recommendations A MV ATF would have greater coverage in 1997 than today

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ATFs’ Relentless Drive for Low Viscosity

7.60 7.50

6.00 6.00

6.75

5.65 5.50 5.50

4.254.50

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

KV

@ 1

00°C, cSt)

ATF Viscosity Trend

1997 2000 2005 2011 2016LaunchYear

Lower Viscosity = Fuel Efficiency

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Lower the viscosity…

- Fluid durability is key

- What could possibly go wrong?

ATF Market by Type

• Over the years, this market has remained largely unchanged…

– Unlicensed DEXRON®/ MERCON® comprises half of the market

– Multi-vehicle remains the second largest application in the market

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52

97

63

6

ATF +3/+4

Other

DEXRON®/

MERCON®

DEXRON® -VI

Multi-vehicle

MERCON® V

17

Toyota T-IV

Total NA Market

All figures based on Afton proprietary research.

ATF Aftermarket Dynamics

NA ATF Aftermarket PortfolioPe

rforman

ce

• Higher shear stability• JASO credentials• Asian vehicles

Multi‐Vehicle

Market Segment

Low‐Vis ATFs

Multi‐Purpose

Multi‐Vehicle

• Pre‐2006 vehicles• DEX / MERC

• Licensed• DEXRON VI • MERCON LV• JASO credentials

market movement

Market Enforcement Actions

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Enforcement Activities

Ethics Committee• Currently tests PCMO & Tractor

Letter to API:

PQIA: The Petroleum Quality Institute of America “The independent resource for

information and insights on the quality and integrity of lubricants in the marketplace”

135

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Regulatory Actions136

PQIA Website – December 4, 2014

The North America Aftermarket - Summary

• Next-Gen OEM Hardware– Proliferation of LV fluids

• Economic Rebound– Higher price LV ATF volume is taking hold – Anticipated growth in medium-duty segment

• Aftermarket Complexity will Continue– Confusion – ATF education is paramount

• Enforcement Actions to Increase

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Fuel Efficiency is king!

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Stakeholder Education is Critical

OEMs Industry using fluids blended to the exacting standards of OEM vehicles –

better vehicle performance Stakeholder access to quality, consistent ATF – enhanced brand

management Fewer warranty claims

Oil Companies & Retailers Push to higher quality ATF’s – maintain / strengthen market image Assurance of quality fluids – more effective category management Satisfied drivers

Drivers Do the job right with the right ATF Fewer headaches

Education has Tangible Benefits

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Passion for Solutions™ – Our Philosophy

Kennon A. Artiskennon.artis@aftonchemical.com

Questions / Discussion