Truck sales remain low as new emission standards require expensive upgrades to vehicles. Off-road engine sales are also low but expected to rebound as interim emission limits phase in. Emission regulations are driving the need for new lubricant specifications with improvements in areas like low SAPs and robustness to support extended oil drain intervals with modern aftertreatment devices. The global heavy-duty engine oil market is projected to increase overall with the fastest growth in Asia-Pacific countries and a shift toward higher performing multi-grade oils.

1. HD OEM and Lubricant Trends
May 2010

2. Presentation Topics
Market data and OEM trends
 Emissions
reduction and devices
Lubricant trends
 API
categories and new developments
 HDEO market trends

3. HD OEM Market and Trends
HD OEM Market
Market data

4. 4
HD Market: “Global” Production Position
Produced Heavy Duty Vehicles – 2007 (estimated)
1 000 units
207
Daimler
•
•
•
•
175
Volvo
130
Tata
CNHTC
99
FAW
96
44
18
17
Mercedes
122
Freightliner 52
Sterling
14
Fuso
14
W. Star
5
• DAF
52
• Kenworth 38
• Peterbilt 22
112
Paccar
Volvo
Renault
Nissan Diesel
Mack
•
•
•
•
•
96
Other
• Shaanxi
• Foton
• Ashok L.
• Internat’l
• Kamaz
• Hino
• Chongqing
• Maz
• Isuzu
88
DongFeng
MAN
74
Scania
71
Iveco
0
67
20
40
60
80
100
120
Fuels and Lubricants, Bengt Otterholm
140
160
180
200
220
September 30, 2009
60
57
India 56
USA
35
Russia 28
Japan 30
China 24
Russia 21
Japan 18
China
China

5. HD Market: Engines – On Road
Truck sales remain at historic lows with minimum pre-buy occurring prior to
US 2010 emission limit requirements. MY2010 trucks will cost up to $10,000
more and, most, will require use of diesel exhaust fluid (DEF).

6. HD Market: Engines – Off Road
Off road engine sales are also remain low, but are expected to rebound as US
Interim Tier 4 emission limit requirements phase in from 2011 – 2014. I Tier 4
limits will require most manufacturers to use cooled EGR and DPF strategies.

7. HD OEM Market and Trends
HD OEM Trends
Market data
OEM trends
 Emissions
reductions

8. Emissions: EPA 2007 Rule
0.10
CJ-4
Post Treatment Devices
Requires reductions of 95% in NOx and 90% in
Particulate Matter (PM) emissions from HD Diesel
Engines
CI-4
2002
Increase
EGR Rate
0.02
CH-4
1998
Use of EGR
2007~2010
0.01
2 2.5 3
4
NOx (g/hp-hr)

9. Emissions: Global Emissions Regulations

10. Emissions: Impact on HD Fleet in Europe
Quick transition to new engine types
 Euro
III introduced in 2002
IV introduced in 2006 – 1/3 of the
market in 2 years
 Euro
 Euro
V to be introduced in 2009
New engines = new requirements
 Increasing
Trucks market share (>16t)
WE 2008
Source : ACEA / Afton estimate
demand on lubricant
performance

11. Emissions: EURO VI Technical Solution
All OEMs will need DPFs and SCR to comply with Euro VI
Different strategies how TC and EGR are used
All OEMs need mid/low SAPS oils
Major impact on oil robustness and oil drain intervals

12. HD OEM Market and Trends
HD OEM Trends
Market data
OEM trends
 Emissions
• Devices
– EGR
reductions
NOx reduction

13. HD OEM Market and Trends
HD OEM Trends
Market data
OEM trends
 Emissions
• Devices
– EGR
– DPF
reductions
Particulates reduction

14. HD OEM Market and Trends
HD OEM Trends
Market data
OEM trends
 Emissions
• Devices
– EGR
– DPF
– SCR
reductions
NOx reduction

15. HD OEM Market and Trends
HD OEM Trends
SCR

16. HD OEM Market and Trends
HD OEM Trends
Market data
OEM trends
 Emissions
reductions
• Devices
• Impact on lubricant

17. HD OEM Market and Trends

18. HDEO Trends
HDEO Trends
API HDEO

19. HDEO: API “C” Category History
Oil Quality Levels
API CE
Normal-
OEM
Specs
for Higher
Soot Levels
CI-4
Exhaust Gas
Recirculation
(EGR)
CJ-4
Ultra-Low
Sulfur Fuel
(EGR & DPF)
API CH-4
Low- & NormalAPI CG-4 Sulfur Fuel
API
LowCF-4 Sulfur Fuel
Sulfur Fuel
1988
1991
1995
1998
1999
Year of API License
2002
2006

20. HDEO:EPA 2007 Impact of Oil Formulation
CI-4/CI-4+ Lubricant
ASH = 1.2-1.5 %
S = No limit
P ~ 0.14 %
Volatility = 15 %
BO : Gr-I & Gr-II
CJ-4 Lubricant
ASH = 1.0 %
S = 0.4 %
P = 0.12 %
Volatility = 13 %
BO : Gr-II
ACEA E9-08

21. EMA Update (December 2009)
API Category Licensing Update
API Category
No new license
Date obsolete
CF-4
01 Jul 2007
30 Jun 2008
CG-4
01 Sep 2008
31 Aug 2009
CF-2
29 Jul 2009
01 Feb 2010
CF
30 Dec 2009
30 Dec 2010

22. EMA Update (December 2009)
Caterpillar Emulsion Test
 Field
testing to correlate laboratory results to field
 The O-West bench test will be set up at a third party laboratory
and an ASTM test method will be pursued
API CF
Oil and water
clearly
separated
API CF
API CI-4
No oil-water
layer visible
Solid emulsion
API CG-4
API CH-4
API CH-4
Old Add PackNew Add Pack
API CI-4 PLUS API CJ-4
Oil and water clearly separated with layer
of emulsion still visible
Source: Caterpillar presentation to API
DEOAP, August 2008

23. EMA Update (December 2009)
EMA Concerns
 EMA concerned
about shear stability
 EMA concerned about EOAT shift (not supported by SP data)
 EMA now has a new concern about oil filter plugging (using
standard oil filter)
 Fuel economy remains an active topic ( less than 3.5 HTHS?)

24. Preparing for next HDEO Category
Next Generation HDEO
 API
CJ-4 summary
• It took almost five years to develop CJ-4 (4Q2002 to 4Q2006) at a total
cost of ~$5.5 MM in total test cost (not including manpower).
 Drivers
for a new category in 2014-2015:
• Fuel Economy for CO2 reduction (which may include lowering the J300
HTHS)
• Replacement of Existing Engine Tests
• Biodiesel Test (B20?)
• Chemical Box (0.1 wt. % P?)
• Turbo deposit test?
 Potential
impacts include a movement to lower viscosity grades
with need for enhanced oxidation & corrosion control

25. HDEO Trends
HDEO Trends
API HDEO
Global HDEO demand

26. Global HDEO Demand Projection
% Growth
Kilotonnes
5.0
9,656
10,000
8,543
8,000
A-P
A-P
0
Latin America
EMEA
1.0
EMEA
EMEA
L.A.
L.A.
N.A.
2,000
3.0
2.0
6,000
4,000
Asia-Pacific
4.0
0.0
-1.0
-1.0
3,000
Kilotonnes
0.0
1.0
2.0
3.0
4.0
N.A.
2007
North America
2014
Strong Growth in Asia-Pacific:
 China projected to have highest growth (2x global avg.)
EMEA growing just under global average:
 E. Europe projected to have highest growth, followed closely by M.E. and
Africa
 W. Europe flat
N.A. flat/decreasing
L.A. growing at global average
Overall Market Demand is INCREASING
Global:
CAGR
1.80%
Asia-Pacific:
EMEA:
3.50%
1.70%
Latin America:
1.80%
North America:
-0.20%
5.0

27. Global HDEO Demand Projection by VIS Grade
9,656.40
10,000
8,542.60
8,000
Other Monograde
Other Monograde
SAE 40
6,000
4,000
15W-40
15W-40
2,000
10W-40
0
15W-40
2.20%
0.50%
-2.00%
10W-30
2007
6.00%
10W-40
10W-30
0.90%
10W-30
Other Multigrade
1.80%
10W-40
Other Multigrade
SAE 40
Other Multigrade
SAE 30
1.40%
SAE 30
SAE 30
CAGR
Other Monograde
SAE 40
VIS Grade
2014
Highlights:
• 15W-40 has most volume demanded of any VIS grade
• Growth rates for multi-grades are higher than growth rates for
mono-grades

28. Global HDEO Demand Projection by API Specs
Lubricant
10,000
8,000
6,000
4,000
2,000
7,296
All Other
(CC/CD/CE/CF2)
7,741
All Other
(CC/CD/CE/CF2)
CG4/CF4
400
300
CH4
Growth (CAGR)
289
264
189
100
165
192
15
124
10
72
2013
18
CI4/CI4+
0
CJ4
CJ4
Treat Rate %
2008
2013
25
20
209
2008
CH4
30
353
200
CG4/CF4
CI4/CI4+
0
Additive
All Other
11.30
Highlights:
•The Global API Market is changing:
-Demand will see a shift to more recent API specs and
higher performance HDEO
CG4/CF4
CH4
CI4/CI4+
CJ4
12.10
12.30
14.40
14.90
CAGR
Total
1%
All Other
-5.40%
CG4/CF4
3.40%
CH4
4.90%
CI4/CI4+
-1.40%
CJ4
26.30%
5
0

29. Summary
Emissions reduction is biggest driver
Use of aftertreatment devices require special lubricant
properties
 Low
SAP oils
 Improved robustness to maintain ODIs
Increased use of biofuels
Trend to global specifications
Trend towards multigrade and higher performing oils