Applications and Impact of ACEA and European Passenger Car OEM Specifications in Asia Pacific

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1 Applications and Impact of ACEA and European Passenger Car OEM Specifications in Asia Pacific RICHARD VAN DEN BULK RICHARD HOGENDOORN JEROEN VAN LEEUWEN GARY PARSONS CHEN GANG PRESHIT DALVI

2 Agenda ACEA and European OEM Specifications Key differences against API and ILSAC Background on complexity European Specs in Asia Pacific (AP) Drivers Important European OEM approvals for AP Evolution of ACEA and European Specifications Future changes Consequences for AP passenger car lubricant market Summary

3 ACEA and European OEM Specifications Key differences against API and ILSAC Background on complexity

4 EAME OEM Specifications vs API and ILSAC Key Differences Combination of gasoline and diesel tests in one oil Soot and deposit control tests demand higher amounts of dispersant and detergent for extra cleanliness performance

5 Gasoline Engine Step-Change for CO 2 Reduction: Downsized, Turbo-charged, Direct Injected High specific power and high stress on oil: an example Ford Focus Ecoboost 1.0 liter / 3 cylinder 125 hp 125 hp / liter 1 turbo km/h: 11.0 sec Max speed: 195 km/h / 121 mph 21 km/l or 52 MPG, 108 g/km CO2 Porsche 911 Turbo 3.8 liter / 6 cylinder 520 hp 136 hp / liter 1 turbo km/h : 3.4 sec Max speed: 315 km/h / 197 mph 10.3 km/l or 25.1 MPG, 227 g/km CO 2 High loaded engines nowadays are found in common cars, not only high performance sports-cars. All need high quality, OEM approved oils

6 EAME OEM Specifications vs API and ILSAC Key Differences Combination of Gasoline and Diesel tests in one oil Soot and deposit control tests demand higher amounts of dispersant and detergent for extra cleanliness performance Aimed at highly loaded and hot running engines Demand higher amounts of anti-oxidants and other additives to control oxidation and viscosity increase over the life-time of the drain intervals

7 EAME OEM Specifications vs API and ILSAC Key Differences Combination of Gasoline and Diesel tests in one oil Soot and deposit control tests demand higher amounts of dispersant and detergent for extra cleanliness performance Aimed at highly loaded and hot running engines Demand higher amounts of anti-oxidants and other additives to control oxidation and viscosity increase over the life-time of the drain intervals Need for Long-Drain capability (Typical km or 2 years in Europe) OEM s request a.o. lower Noack (10 12% range in OEM specs) driving to high amount or full Group III base-oils in finished oils

8 European OEM Concerns and Demands Result in OEM Specific Engine Oil Specifications Fuel Economy 1 Lubricants Fuel Economy optimized lower viscosity oil (SAE 0W-xx) Biofuel, Liquid Petroleum Gas, Liquified Natural Gas, Low Fuel Quality High sulfur, aromatics, gums, etc. Increased oxidation Corrosion (organic acids) Nitration Sulfuric acid neutralization (TBN) & sludge Fuel Economy 2 New Engine Technology Gasoline Direct Injection (Multiple) Turbo Chargers Down-sizing & increased power Variable Valve Train s & Cylinder de-activation Down-speeding: Higher Torque at low RPM / LSPI Variable Oil pump, EGR, DLC & plasma coatings, start/stop, new bearing materials, etc. Emission Legislation Particulate filter for gasoline: Mid-ash chemical box ACEA only / API / ILSAC based oils do not cover (all) above OEM concerns OEM s develop and mandate extra OEM tests on top of ACEA!

9 EAME OEM Specifications vs API and ILSAC Key Differences Combination of Gasoline and Diesel tests in one oil Soot and deposit control tests demand higher amounts of dispersant and detergent for extra cleanliness performance Aimed at highly loaded and hot running engines Demand higher amounts of anti-oxidants and other additives to control oxidation and viscosity increase over the life-time of the drain intervals Need for Long-Drain capability (Typical km or 2 years in Europe) OEM s request a.o. lower Noack (10 12% range in OEM specs) driving to high amount or full Group III base-oils in finished oils And OEM mandate additional testing on top of ACEA for approvals Wide variety of tests between different OEM s adding a.o. extra costs and complexity

10 OEM Specifications Above ACEA Building Block More Than 50 OEM Specs in Europe Today CONVENTIONAL SAPS LOW & MID SAPS Mazda & Honda Diesel Service Fill MB MB MB (=RN0710) Other Japanese if genuine oil not available MB MB MB Fiat H2, Fiat M2,N2,Z2 PSA B PSA B PSA B Porsche C30 Porsche A40 (or A3/B3 or A3/B4) Porsche A40 (or A3/B4 or C3) Porsche A40 (or A3/B3 or C3) Ford WSS-M2C 913 D/C VW /509.00* VW / VW / BMW Longlife 14FE+ * VW / VW / VW / STJLR BMW Longlife 12FE BMW Longlife 04 STJLR STJLR PSA B PSA B PSA B PSA Volvo RBS 0-2AE* GM dexos 2 FIAT G1 Fiat G2, Fiat D2 RN 0710 RN 0700 (or A5/B5) RN 0700 (or A3/B4) STJLR Fiat S1, Fiat GS1, DS1 Fiat S2, S3, GH2 Fiat T2 RN 0720 PSA level 1 (ACEA-10 or older!) MB BMW Longlife 01 BMW Longlife 01FE Ford WSS-M2C 934B Ford-M2C 948-B* Ford-M2C 950-A PSA MB (= RN 0720) A1/B1 A3/B3 A3/B4 A5/B5 C1 C2 C3 C4 HTHS 2.9 & < 3.5 xw-20: & TBN Sulph. Ash & & * = HTHS 2.6 instead of 2.9

11 ACEA and European OEM Specifications In Asia Pacific Drivers for European Specs in Asia Pacific (AP) Important European OEM approvals for AP

12 Continuously Rising Market Volume of European OEMs China Passenger Car Sales Volume - By JV/OEM country origin China All PC Sales Volume By Brand Type Unit k % 3.7% 7.9% 3.1% 9.0% 12.3% 2.8% 8.8% 12.8% 2.8% 2.7% 8.6% 12.4% 18.9% 7.5% 8.1% 11.7% 20.0% 10.3% 11.0% 18.8% 14.4% 16.5% 18.4% 15.9% 16.3% 15.7% 19.5% 19.4% 16.4% 41.3% 45.6% 42.2% 42.0% 40.3% 38.4% China Japan Germany North America Korea France 3.5 %: French OEM s 18.9 %: German OEM s Increased European passenger car market share will drive to a Top Tier segment of oils European OEM approved oils are becoming increasingly important in Asia Pacific

13 European Emissions Timeline Year Emission Standard Sulfur Level (ppm) Euro 3 Euro 4 Euro 5a Euro 5b Euro 6 Intro Euro 6 Diesel Gasoline After-treatment SCR/NOx Cat (NOx) Diesel Oxidation Catalyst (HC + OC) Diesel Particulate Filter (Soot) Gasoline 3-way Catalyst (HC + OC + NOx) Gasoline Particulate Filter? (Soot) Year ACEA Main impact related to aftertreatment system Introduction of C1, 2 & 3 categories (Mid & Low SAPS oils) Combination of A & B categories (gasoline & diesel specs) Introduction of C4 category Minimum ash and TBN levels for A3/B3 and A3/B4 (to avoid misuse of low- and mid-saps oils) Mid-SAPS oils introduction together with ULS Fuel

14 Introduction of Lower SAPS Oils in Europe Simultaneous with Ultra Low Sulfur Fuel Lower SAPS lubricants are mandatory only with after-treatment Fuel quality is main concern for European OEM in Asia Pacific Increased oil degradation due to lower fuel quality around in some AP regions Conventional oils are the technically the safest solution for gasoline-only countries or diesel without after-treatment (pre-euro 5) No chemical limits restricting the use of very powerful additives o For instance detergents and ZnDTP o Especially in regions where fuel quality is not guaranteed it is these additives which, by field performance, have shown to be very effective

15 European OEM Oil Specifications for Outside Europe (with ACEA basis) Gasoline Diesel with DPF without DPF GM dexos 1 (API+ ACEA based) dexos 2 (C3 + API based) dexos 2 (C3 + API based) VW, AUDI, Skoda, Seat VW * (A3/B4 or C3 based) For US only: VW allowed also VW (~C3 based) VW (C3 based) MB MB only (A3/B4 based) MB or 51/31 (C3 based) depending on engine type MB 229.3/5 (A3/B4 based) or MB229.31/51/52 (C3 based) depending on engine type BMW BMW LL01 ** (A3/B4 based) BMW LL04 *** (C3 based) BMW LL01 (A3/B4 based) Porsche Porsche A40 (A3/B3/B4 or C3 based) Porsche C30 (~C3 based) Porsche C30 (~C3 based) PSA B or 2302 (A5/B5 based) - - Renault ACEA A3/B4 ACEA C3 ACEA A3/B4 * = VW in Brazil ** = BMW Gasoline: In US new N20 and "Baukasten" can also use BMW LL-14FE+. *** = BMW Diesel: Engines with one turbo can also use BMW LL-12FE = GM: If no dexos 2 available diesels without DPF can use ACEA A3/B4. = Daimler: For exact details see MB Sheet on: bevo.mercedes-benz.com

16 European OEMs Mandate their OEM Approved Oils for Service Fill European OEM s mandate this worldwide including Asia Pacific OEM approvals ensures right quality above ACEA or API/ILSAC Plain API or ACEA is not enough European OEM approved oils are required to maintain warranty! Outside warranty period ensures correct engine protection Key European OEM Specifications are open to all oil companies

17 Evolution of ACEA and European Specifications Future Changes Consequences for AP Passenger Car Lube Market

18 Future of European OEMs Specifications and Impact Outside Europe Global Fuel Economy legislations drives to lower viscosities: From SAE 5W-40 to 5W-30 and further towards SAE 0W-20. Plus Mid SAPS platforms for gasoline also At the same time OEM requirements drive to high quality oils on among other: Fuel Economy Durability: o o o o Wear Oxidation stability Viscosity control Cleanliness Biofuel compatibility Plus new requirements are added, a.o.: LSPI (Low Speed Pre-Ignition)

19 Asia Pacific Countries Drive Further Towards Stricter Emission Legislation: China Pass Car Emission Legislation China (GB18352) China II China III China IV Beijing China III China IV China V Beijing VI Shanghai China II China III China IV China V Guangzhou (Pearl River Delta) China III (from Sept.1, 2006) China IV China V China Gasoline Fuel Legislation China (GB17930) China II China III China IV Beijing Beijing VI: Beijing VI planned for Beijing from Dec 1 st 2017 (draft spec. being published) Beijing VI follows California LEV3 ULEV70 instead of EU VI o China III China IV Test cycle will be US FTP75 instead of EU NEDC Finally there is no Particulate Number limit for GDI engines Diesel powered Passenger Cars is still prohibited in Beijing China VI Test cycle is under development, may or may not be the same as Beijing VI Required high fuel quality is not yet guaranteed in all regions Longer Oil Drain Intervals can be achieved with better quality gasoline fuel China V Shanghai Pre - Local Spec. China IV China V Guangzhou China III China IV China V China V China V Beijing V gasoline tbd

20 Asia Pacific Countries Drive Further Towards Stricter Emission Legislation: India Indian Emission Regulations (light duty emission standards with a modified EUDC maximum speed limited to 90 km/h) Year of Implementation Level of European Emission Standards 2002 Euro 2: four metro-cities 1 Euro 1: rest of country 2003 Euro 2: seven more cities Euro 3: thirteen cities Euro 2: rest of the country 2010 Euro 4: thirteen cities Euro 3: rest of the country Bharat Stage IV Introduced in 13 cities, Rest of the country is based on Bharat Stage III fuel Currently North India on Euro IV, PAN India Euro IV will be done by April 2017 Government has decided to leapfrog to Bharat Stage VI equivalent to EURO VI by 2020

21 Summary: European OEMs mandate their OEM approved oils for service fill worldwide including Asia Pacific Plain API or ACEA is not enough OEM approvals ensures right quality above ACEA or API/ILSAC A major portion of today s Asia Pacific market is in the conventional segment Conventional oils ensures best engine protection since no additive limitation Without after-treatment, Mid SAPS oils are mostly not allowed nor needed The Asia Pacific market will move more stringent emission legislation and better quality fuels, like for instance China V by early 2017 When after- treatment is required the mid SAPS segment will grow in Asia Pacific European OEMs continue to increase their lubricant requirements Fuel economy legislation push to lower viscosities while increasing performance Oronite continues to invest to meet current and future needs of the highest quality OEM approved oils

22 Thank You!

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