Implementing Mobile A/C Refrigerant Service Environmental Enhancements

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Implementing Mobile A/C Refrigerant Service
Environmental Enhancements

• Jim Resutek
• OTB Consultants
• June 2008

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Purpose

• Provide opportunity to implement new technology
  and enhanced dealer service capabilities with
  both environmental and cost benefits.

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Key Topics

• Government/Industry Drivers
• Current A/C Warranty Process
• Industry Changes and New Technology Provide Cost
  Savings Opportunities for OEMs
• The Opportunity

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Government/Industry Drivers

• Government
• 609 Regulations
• Technician Certification
• Recovery Reuse Requirements

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Government/Industry Drivers

• Industry
• SAE
• Enhanced service leak detection standards (J-
  1627 enhanced to J- 2791)
• Enhanced Recovery/Evacuation/Recharge standards
  (J-2210 to J-2788)
• OEM
• Enhanced system designs less refrigerant,
  tighter charge tolerances, tighter systems

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Enhanced Recovery/Evacuation/Recharge standards
(J-2210 to J-2788)
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SAEEnhanced service leak detection standards (J-
1627 enhanced to J- 2791)
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Service Equipment Suppliers Conundrum

• Invested several millions of dollars in
  development, implementation and marketing to meet
  new standards
• Leveraged Opportunity Costs to accelerate
  market release of new product
• Limited support from OEMs and Government
  agencies to drive need for new equipment

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Implementation Motivation Issues

• Requirements to manufacture equipment to new
  standards BUT no requirements for service
  community to rush into equipment implementation
• Industry OEMs reluctance to mandate dealer/fleet
  compliance
• Continued competition from non compliant a/c
  service operations

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Business Case Examples

• Employing Warranty cost reduction to implement
  dealer/fleet service equipment upgrades OEM
  application
• Out of the Box service tool/procedures Vehicle
  Recycle Industry

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Business Case Examples

• A few OEMs have reviewed the options of
  implementing warranty reductions towards
  offsetting service tooling costs

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Current A/C Warranty Process

• Labor
• 100s of warranty operations require refrigerant
  removal
• A/C
• Powertrain
• Suspension related
• Reimbursement time
• .6-1.2hr for single A/C systems
• .8 -2.0hr for dual A/C systems

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Current A/C Warranty Process

• Material
• Refrigerant recovered is reimbursed to dealers _at_
  100 vehicle A/C refrigerant capacity
• Government Regulation
• EPA mandates that mobile refrigerant MUST be
  recovered and recycled

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Current A/C Warranty Process

• Millions of A/C recovery operations per year is
  the Service Requirement estimate
• ( --- xxxx dealers x 2/day x 260
  days/yr )
• Average Refrigerant charge
• Front system only 2 lb 90 of production
• Front and rear system combined 3 lb 10 of
  production

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Current A/C Warranty Process

• Validated Example
• Labor operation Over 12 months had 67,500
  payouts (142,000lb _at_ 6.50 923,000)

Estimated warranty national mean amount paid
July 07 Composite 90 67.5k _at_2 .10 67.5k
_at_3lb
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Current A/C Warranty Process

• Sample Estimated Yearly Warranty Refrigerant
  Usage
• A/C recovery operations
• 90 of single system vehicles 6.5 M lb
• 10 of dual system vehicles 1.1 M lb
• 7.6 Million pounds of R-134a per year

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Current A/C Warranty Process

• Economic Impact R-134a Pricing
• July 07 - Dealer cost per pound 3.14
• Warranty reimbursement cost 6.50 per pound
  includes dealer markup

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Current A/C Warranty Process
8.50
6.50
4.50
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Background

• J-2210
• State of the art equipment provided to dealers in
  1993
• Meets SAE J-2210
• Smaller vehicle A/C charge requirements need
  equipment meeting SAE J-2788 to maintain system
  integrity/performance

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Background

• Governmental Regulation
• Manufacturers can only build J-2788 compliant
  equipment effective January 2008
• EPA and other environmental groups highly
  recommend implementation of J-2788 equipment due
  to higher recovery (95 of refrigerant vs.
  J-2210 80 recovery)
• EPA has not mandated J-2210 replacement

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Technology Highlights

• New SAE J-2788 Compliant Equipment
• Recovers 95 of R-134a
• Scale accuracy of /- 0.5oz
• Encrypted code for warranty tracking and
  authentication
• Ability to work with Hybrid vehicles (PAG/Ester
  oil separation)
• Quicker recovery time

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Todays Reality

• Current J-2210 is over 15yrs old
• Cant be re-worked/retrofitted to meet new SAE
  J-2788 requirements
• Doesnt meet new charge accuracy requirement
• Maintenance expenses increase with age
• Fully depreciated by dealers
• New Vehicle A/C Requirements
• Require increased charge accuracy for optimum
  performance
• Greater percentage of vehicles will incorporate
  electrical hybrid A/C systems requiring oil
  separation

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Present New Opportunities

• Opportunity to
• Reduce refrigerant charges
• Provide enhanced equipment to dealer
• Continuous yearly savings
• Payback range for 100 funding with equipment
  rollout 6-12 months

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Opportunity

• Implementation
• Estimated cost of replacing J-2210 to meet new
  J-2788
• 4500 per unit (Based on dealers receiving one
  unit per)
• Average Industry cost
• Implementation of encrypted code - cross check on
  warranty RO payment
• Dealer resistance to purchasing a new machine
• Dealer investment subsidizing OEM savings
• Offset via N/C equipment
• No Dealer capital investment
• Lower equipment maintenance charges
• Enhanced recovery increasing customer pay return
• OEMs reimbursing dealers only for Refrigerant
  loss (similar to current engine coolant policy)

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Savings Potential

• Estimated Savings
• R-134a
• Quantity Range --- 5 million to 10 million pounds
  
• Cost Range --- 4 --- 10 per pound
• 33 - 65 million per year warranty
  savings

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Business Case Example - 2

• Out of the Box service tool/procedures Vehicle
  Recycle Industry
• Reduce the amount of time to recover
• Reduce the equipment investment
• Enhance the residual payback

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Vehicle Recycle Industry
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Out of the Box service tool/procedures Vehicle
Recycle Industry

• Reduce the amount of time to recover
• Check quickly for charge presence
• Pierce line/hose to recover units will be
  scraped once recovery completed eliminates time
  to locate and connect to service ports

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Out of the Box service tool/procedures Vehicle
Recycle Industry

• Reduce the equipment investment
• Standardize equipment employed at recovery sites
• Review need to identify gases

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Out of the Box service tool/procedures Vehicle
Recycle Industry

• Enhance the residual payback
• Segregate recovered refrigerant
• Employ company wide standardization and
  purchasing

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Summary

• Industry Service Tools Equipment Implementation
• OEM pro-active implementation throughout their
  service facilities will provide a large footprint
  impact into reducing emission.
• OEM participation will provide volume discounts
  and trickle down of older equipment to the servce
  aftermarket

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Summary (cont)

• Industry Service Tools Equipment Implementation
• Business cases drive OEM actions

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• Questions?