Post on 15-Dec-2015
Implementing Mobile Implementing Mobile A/C Refrigerant A/C Refrigerant
Service Service Environmental Environmental EnhancementsEnhancements
Jim ResutekJim ResutekOTB ConsultantsOTB Consultants
June 2008June 2008
PurposePurpose
Provide opportunity to implement new Provide opportunity to implement new technology and enhanced dealer service technology and enhanced dealer service capabilities with both environmental and capabilities with both environmental and
cost benefits.cost benefits.
Key TopicsKey Topics
Government/Industry DriversGovernment/Industry Drivers
Current A/C Warranty ProcessCurrent A/C Warranty Process
Industry Changes and New Technology Industry Changes and New Technology Provide Cost Savings Opportunities for Provide Cost Savings Opportunities for OEM’sOEM’s
The OpportunityThe Opportunity
Government/Industry Government/Industry DriversDrivers
GovernmentGovernment 609 Regulations 609 Regulations
Technician CertificationTechnician Certification Recovery & Reuse RequirementsRecovery & Reuse Requirements
Government/Industry Government/Industry DriversDrivers
IndustryIndustry SAESAE
Enhanced service leak detection standards (J- Enhanced service leak detection standards (J- 1627 enhanced to J- 2791)1627 enhanced to J- 2791)
Enhanced Recovery/Evacuation/Recharge Enhanced Recovery/Evacuation/Recharge standards (J-2210 to J-2788)standards (J-2210 to J-2788)
OEMOEM Enhanced system designs – less refrigerant, Enhanced system designs – less refrigerant,
tighter charge tolerances, tighter systemstighter charge tolerances, tighter systems
Enhanced Recovery/Evacuation/Recharge standardsEnhanced Recovery/Evacuation/Recharge standards (J-2210 to J-2788)(J-2210 to J-2788)
SAESAEEnhanced service leak detection Enhanced service leak detection standards (J- 1627 enhanced to J- standards (J- 1627 enhanced to J- 2791)2791)
Service Equipment Service Equipment Suppliers ConundrumSuppliers Conundrum
Invested several millions of dollars in Invested several millions of dollars in development, implementation and development, implementation and marketing to meet new standardsmarketing to meet new standards
Leveraged “Opportunity Costs” to Leveraged “Opportunity Costs” to accelerate market release of new productaccelerate market release of new product
Limited support from OEM’s and Limited support from OEM’s and Government agencies to drive need for Government agencies to drive need for new equipmentnew equipment
Implementation Implementation Motivation IssuesMotivation Issues
Requirements to manufacture equipment Requirements to manufacture equipment to new standards – BUT – no to new standards – BUT – no requirements for service community to requirements for service community to rush into equipment implementationrush into equipment implementation
Industry OEM’s reluctance to mandate Industry OEM’s reluctance to mandate dealer/fleet compliancedealer/fleet compliance
Continued competition from non Continued competition from non compliant a/c service operationscompliant a/c service operations
Business Case ExamplesBusiness Case Examples
Employing Warranty cost reduction to Employing Warranty cost reduction to implement dealer/fleet service equipment implement dealer/fleet service equipment upgrades – OEM applicationupgrades – OEM application
““Out of the Box” service tool/procedures Out of the Box” service tool/procedures Vehicle Recycle IndustryVehicle Recycle Industry
Business Case ExamplesBusiness Case Examples
A few OEM’s have reviewed the options A few OEM’s have reviewed the options of implementing warranty reductions of implementing warranty reductions towards offsetting service tooling coststowards offsetting service tooling costs
Current A/C Warranty Current A/C Warranty ProcessProcess
LaborLabor 100’s of warranty operations require 100’s of warranty operations require
refrigerant removal refrigerant removal A/CA/C
PowertrainPowertrain
Suspension related Suspension related
Reimbursement time: Reimbursement time: .6-1.2hr for single A/C systems.6-1.2hr for single A/C systems
.8 -2.0hr for dual A/C systems.8 -2.0hr for dual A/C systems
Current A/C Warranty Current A/C Warranty ProcessProcess
Material Material
Refrigerant recovered is reimbursed to Refrigerant recovered is reimbursed to dealers @ 100% vehicle A/C refrigerant dealers @ 100% vehicle A/C refrigerant capacitycapacity
Government RegulationGovernment Regulation
EPA mandates that mobile refrigerant EPA mandates that mobile refrigerant MUSTMUST be recovered and recycledbe recovered and recycled
Current A/C Warranty Current A/C Warranty ProcessProcess
Million’s of A/C recovery operations per Million’s of A/C recovery operations per year is the Service Requirement estimateyear is the Service Requirement estimate
( --- xxxx dealers x 2/day x 260 days/yr )( --- xxxx dealers x 2/day x 260 days/yr )
Average Refrigerant charge:Average Refrigerant charge: Front system only 2 lb = 90% of productionFront system only 2 lb = 90% of production Front and rear system combined 3 lb = 10% of Front and rear system combined 3 lb = 10% of
production production
Current A/C Warranty Current A/C Warranty ProcessProcess
Validated ExampleValidated Example Labor operation Labor operation
Over 12 months had 67,500 payouts Over 12 months had 67,500 payouts (~142,000lb(~142,000lb**** @ $6.50 @ $6.50** = $923,000) = $923,000)
* Estimated warranty national mean amount paid July ‘07** Composite –90% 67.5k @2# + .10% 67.5k @3lb
Current A/C Warranty Current A/C Warranty ProcessProcess
Sample Estimated Yearly Warranty Sample Estimated Yearly Warranty Refrigerant UsageRefrigerant Usage
A/C recovery operationsA/C recovery operations 90% of single system vehicles = 6.5 M lb90% of single system vehicles = 6.5 M lb 10% of dual system vehicles = 1.1 M lb10% of dual system vehicles = 1.1 M lb
7.6 Million pounds of R-134a per 7.6 Million pounds of R-134a per year year
Current A/C Warranty Current A/C Warranty ProcessProcess
Economic Impact R-134a PricingEconomic Impact R-134a Pricing
July ’07 - Dealer cost per pound $3.14July ’07 - Dealer cost per pound $3.14
Warranty reimbursement cost $6.50 per Warranty reimbursement cost $6.50 per pound – includes dealer markuppound – includes dealer markup
Current A/C Warranty Current A/C Warranty ProcessProcess
$8.50 #
$6.50 #
$4.50 #
BackgroundBackground J-2210J-2210
State of the art equipment provided to State of the art equipment provided to dealers in 1993dealers in 1993
Meets SAE J-2210Meets SAE J-2210
Smaller vehicle A/C charge requirements Smaller vehicle A/C charge requirements need equipment meeting SAE J-2788 to need equipment meeting SAE J-2788 to maintain system integrity/performancemaintain system integrity/performance
BackgroundBackground Governmental RegulationGovernmental Regulation
Manufacturers can only build J-2788 Manufacturers can only build J-2788 compliant equipment effective January 2008compliant equipment effective January 2008
EPA and other environmental groups highly EPA and other environmental groups highly recommend implementation of J-2788 recommend implementation of J-2788 equipment due to higher recovery (95%+ of equipment due to higher recovery (95%+ of refrigerant vs. J-2210 80% recovery) refrigerant vs. J-2210 80% recovery)
EPA has not mandated J-2210 replacementEPA has not mandated J-2210 replacement
Technology HighlightsTechnology Highlights New SAE J-2788 Compliant EquipmentNew SAE J-2788 Compliant Equipment
Recovers 95%+ of R-134a Recovers 95%+ of R-134a
Scale accuracy of +/- 0.5ozScale accuracy of +/- 0.5oz
Encrypted code for warranty tracking and Encrypted code for warranty tracking and authenticationauthentication
Ability to work with Hybrid vehicles Ability to work with Hybrid vehicles (PAG/Ester oil separation)(PAG/Ester oil separation)
Quicker recovery timeQuicker recovery time
Today’s Reality…Today’s Reality…
Current J-2210 is over 15yrs old Current J-2210 is over 15yrs old
Can’t be re-worked/retrofitted to meet new SAE Can’t be re-worked/retrofitted to meet new SAE J-2788 requirementsJ-2788 requirements
Doesn’t meet new charge accuracy requirementDoesn’t meet new charge accuracy requirement
Maintenance expenses increase with ageMaintenance expenses increase with age
Fully depreciated by dealersFully depreciated by dealers
New Vehicle A/C RequirementsNew Vehicle A/C Requirements
Require increased charge accuracy for optimum Require increased charge accuracy for optimum performanceperformance
Greater percentage of vehicles will incorporate electrical Greater percentage of vehicles will incorporate electrical hybrid A/C systems requiring oil separationhybrid A/C systems requiring oil separation
……Present New Present New OpportunitiesOpportunities
Opportunity to:Opportunity to: Reduce refrigerant chargesReduce refrigerant charges
Provide enhanced equipment to dealerProvide enhanced equipment to dealer
Continuous yearly savingsContinuous yearly savings
Payback range for 100% funding with Payback range for 100% funding with equipment rollout 6-12 monthsequipment rollout 6-12 months
OpportunityOpportunity Implementation Implementation
Estimated cost of replacing J-2210 to meet new Estimated cost of replacing J-2210 to meet new J-2788J-2788 $4500 per unit* (Based on dealers receiving one unit per)$4500 per unit* (Based on dealers receiving one unit per)
* Average Industry cost* Average Industry cost Implementation of encrypted code - cross check on warranty RO paymentImplementation of encrypted code - cross check on warranty RO payment Dealer resistance to purchasing a new machine Dealer resistance to purchasing a new machine
Dealer investment subsidizing OEM savingsDealer investment subsidizing OEM savings Offset via N/C equipmentOffset via N/C equipment
No Dealer capital investmentNo Dealer capital investment Lower equipment maintenance chargesLower equipment maintenance charges Enhanced recovery increasing customer pay returnEnhanced recovery increasing customer pay return
OEM’s reimbursing dealers only for Refrigerant loss (similar to current OEM’s reimbursing dealers only for Refrigerant loss (similar to current engine coolant policy)engine coolant policy)
Savings PotentialSavings Potential Estimated Savings Estimated Savings
R-134aR-134a Quantity Range --- 5 million to 10 million pounds Quantity Range --- 5 million to 10 million pounds
Cost Range --- $4 --- $10 per poundCost Range --- $4 --- $10 per pound
$33 - $65 million per year $33 - $65 million per year warranty savings warranty savings
Business Case Example - 2Business Case Example - 2
““Out of the Box” service tool/procedures Out of the Box” service tool/procedures Vehicle Recycle IndustryVehicle Recycle Industry Reduce the amount of time to recoverReduce the amount of time to recover Reduce the equipment investmentReduce the equipment investment Enhance the residual paybackEnhance the residual payback
Vehicle Recycle IndustryVehicle Recycle Industry
““Out of the Box” service Out of the Box” service tool/procedures Vehicle tool/procedures Vehicle
Recycle IndustryRecycle Industry
Reduce the amount of time to recoverReduce the amount of time to recover Check quickly for charge presenceCheck quickly for charge presence Pierce line/hose to recover – units will be Pierce line/hose to recover – units will be
scraped once recovery completed – eliminates scraped once recovery completed – eliminates time to locate and connect to service portstime to locate and connect to service ports
““Out of the Box” service Out of the Box” service tool/procedures Vehicle tool/procedures Vehicle
Recycle IndustryRecycle Industry
Reduce the equipment investmentReduce the equipment investment Standardize equipment employed at Standardize equipment employed at
recovery sitesrecovery sites Review need to identify gasesReview need to identify gases
““Out of the Box” service Out of the Box” service tool/procedures Vehicle tool/procedures Vehicle
Recycle IndustryRecycle Industry
Enhance the residual paybackEnhance the residual payback Segregate recovered refrigerantSegregate recovered refrigerant Employ company wide standardization and Employ company wide standardization and
purchasingpurchasing
SummarySummary
Industry Service Tools & Equipment Industry Service Tools & Equipment ImplementationImplementation OEM pro-active implementation throughout OEM pro-active implementation throughout
their service facilities will provide a large their service facilities will provide a large footprint impact into reducing emission.footprint impact into reducing emission.
OEM participation will provide volume OEM participation will provide volume discounts and trickle down of older discounts and trickle down of older equipment to the servce aftermarketequipment to the servce aftermarket
Summary Summary (cont)(cont)
Industry Service Tools & Equipment Industry Service Tools & Equipment ImplementationImplementation Business cases drive OEM actionsBusiness cases drive OEM actions
Questions?Questions?