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Coming Soon: New Gasoline and Diesel Motor Oil Specifications

ASPA Winter Meeting, December 2015

Tom Weyenberg

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Agenda: Two Trends

Diesel Engine Oil

PC-11

Late 2016

Gasoline Engine Oil

GF-6

Early 2018

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Diesel Engine Oil: PC-11

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Overview - Application of HDEO

Total HDD USA Lubricant Demand

62% On-Highway

Class 8 50%

Class 7 4.2%

Class 3-6 2.3%

Pick-ups ./ SUV Motor Homes

3.6%

Buses 1.9%

Cl 8 Vocational7.6%

Construction8.4%

Agriculture7.6%

Mining1.9%

Gen Sets2.9%

Marine1.9%

Lawn/Garden/Forestry0.7%

Commercial Industry6.7%

General2.3%

Material Handling2.3%

Pumps / Compressors1.7%

Welders0.4%

Source: Power Systems Research

38% Off-Road

Off-highway trends lags behind on-highway

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Current NA HDEO Market

Performance

Lower Mainline

Mainline

Upper Mainline

Mar

ket v

alue

API CJ-4

OEMs

Group II

15W-40

API CJ-4

OEM

Group II/III

10W-30

SAE 10W/30/40/50

API CF

Group I/II

Group III/IV

API CJ-4OEM

5W-40

Group III/IV

API CJ-4OEM

5W-30

15W-40

API CI-4 to

CI-4 Plus

OEMs

Group I/II

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CI-4/CI-4 Plus is alive, while almost ¾ of the market will covert to PC-11

NA HD Lubricant Volume ~ 440 Million Gal (1.5 Million MT)

NA HD Engine Oils by API credential

Source : Lubrizol

5%

22%

73%

CF/CF-2 & Others

CH-4, CI-4 (Plus)

CJ-4

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North American HD Market Viscosity Trend

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016

Mar

ket

Sh

are

0W-40 5W-30

5W-40 10W-30

15W-40

Source : Lubrizol

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PC-11 is around the corner

• Key drivers: Fuel efficiency and green house gas emissions

Higher engine operating temperatures : Mack T-13 test

Scuffing (adhesive wear) protection : DDC Scuffing test – not API

Oil Aeration concerns : CAT Aeration test

Oil shear down

Bio-diesel fuel (dropped)

• New Proposed Category split by HTHS (1/Dec/2016) High HTHS (PC-11A, CK-4) – Backwards compatible to CJ-4 & older

Low HTHS (PC-11B, FA-4) – Fuel Economy grade for new engines

Improved Fuel Economy and Hardware Protection

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Remaining PC-11 Industry Timing

Activity 2015 20169 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

Technology DemonstrationLimit Setting & Spec.Finalization12 months APIMandatory Waiting PeriodOil Qualification/API Licensing

Tod

ay

API (and OEMs) final specifications are to be set

* EMA request made in 2011

Start API CK-4 and FA-4 licensing and claim

EMA needs it in 2016 for 2017MY

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Visit HDDEO.com

HDDEO.com delivers an exclusive perspective:• Read up on Breaking news• Listen to industry experts’

points of view• Download key industry

presentations

For the insights and in-depth information you need, visit

www.HDDEO.com

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Passenger Car Engine Oil: ILSAC GF-6

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Engine Oils are Key in Enabling OEMs to Meet Fuel Economy Targets

The proposed GF- 6 specification is the most forward-looking

and challenging ILSAC upgrade the industry has ever seen.

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Modern engines are smaller, more powerful, lower emissions and fun!

Passenger Cars Evolving Globally –Introduction of GDI/TGDI

Engine 4.0L V-6 PFI (RWD) 2.0L I-4 TGDI (FWD)

50% smaller engine

Power 145 HP/220 ft-lbs 240 HP / 270 ft-lbs 65 % more power

Transmission 4 Speed Automatic 6 Speed Automatic 50% more gears

Curb weight 4060 lbs 4557 lbs 12% heavier

0-60 mph (sec) 10.8 (AWD V-6) 6.0 sec (AWD V-6) 44% faster

Interior Volume 104.9 ft3 172.7 ft3 65% larger

Fuel Economy 15/20/16 mpg 20/28/23 mpg 43% more fuel efficient

“Biggest change since carburation to Port Fuel Injection”

20141991

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US PC Market by Viscosity Grade

• 5W-30 is now most popular

• 5W-20 is now one quarter of the market

• 0W-XX grades growing as OEMs like Honda and Toyota are recommending

Most PC Lubricants in the US are at the latest ILSAC/API specification: GF-5/SN

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Efficiency and durability must be holistically addressed by GF-6 lubricants

• For the first time ever, the specification will be split into two categories: GF- 6 A accounts for 0W-20 and higher and is backwards compatible GF- 6 B covers ultra-low viscosity (ULV) lubricants and is not backwards

compatible

• GF-6 is unprecedented in its proposed inclusion of six new engine tests Four replacement tests, updated with new hardware

Sequence IIIH (the Chrysler Oxidation and Deposit Test / GM Oxidation and Deposit Test)

Sequence VH Test (The Sludge Test)

Sequence VIE Test (The Fuel Economy Test)

Sequence IVB Test (The Cam/Wear Test) Two entirely new tests

The Low-speed Pre-ignition Test (LSPI Test)

The Timing Chain-wear Test

ILSAC GF-6: A Comprehensive Upgrade

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GF-6 additives are “raising the bar” to maximize overall performance

• Improved fuel economy performance over extended oil drain intervals

• New GDI tests to enable efficient hardware evolution

– LSPI, Chain Wear

• Legacy protection of engine and emission systems

ILSAC GF-6 Performance Relative to GF-5

Emission Protection

Corrosion

Wear Protection

Sludge Control

Fuel Efficiency

Chain Wear

Low Speed Pre-ignition

Emulsion

Proposed ILSAC GF-6A(as of February 2014)

ILSAC GF-5

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Improved fuel economy while improving vehicle performance

Evolution of ILSAC Category / Formulation Challenges

0

2

4

6

8

10

12

0

5

10

15

20

25

30

GF-1 GF-2 GF-3 GF-4 GF-5 GF-6(Proposed)

Incr

easi

ng L

ubric

ant P

erfo

rman

ceLubricant Historic Performance GF-1 to GF-5

LSPI

Chain wear

Fuel eConomy

Ethanol compatiblity

Emissions Durability

Piston Cleanliness

Oxidation Stability

Treat Rate

Engine Power Density

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GF-6 Timeline

Funding of Tests Matrices

GF-6A Specification

ApprovalGF-6

Mandatory

API First Licensing

Tests Acceptance for

Matrices Testing

First Licensing for PC-11

Dec. 1, 2016

Progress has been steady, and first license for GF- 6 is expected in 2018

Jan 2012 Apr 2014

Apr 2015 Feb 2016

Running of the Tests Matrices

Aug 2015 May 2016

Nov 2015 Apr 2016

Tests Acceptance by

ASTM

Engine Oil Technology

Demonstration

May 2016 Feb 2017

Apr 2018Nov 2016 Apr 2017

Apr 2019

Source: AOAP

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Visit GF-6.com

For further details on GF-6, timely updates, video explanations and more

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Summary

Diesel Engine Oil

PC-11

Late 2016

Gasoline Engine Oil

GF-6

Early 2018

• PC-11 is a significant upgrade

• Split Category: • CK-4 backward compatible• FA-4 for Low HTHS fuel

economy

• GF-6 is a significant upgrade

• Split Category• GF-6A for 0W-20 and higher • GF-6B for Ultra Low Vis, not

backward compatible

Both upgrades bring oppotunities for differentiaitionBoth upgrades increase lubricant complexity