# Presentation: 317907

## Implementing Mobile A/C Refrigerant Service Environmental Enhancements

- Jim Resutek
- OTB Consultants
- June 2008

## Purpose

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

## Key Topics

- Government/Industry Drivers
- Current  A/C Warranty Process
- Industry Changes and New Technology  Provide Cost Savings Opportunities for OEM’s
- The Opportunity

## Government/Industry Drivers

- Government
- 609 Regulations
- Technician Certification
- Recovery & Reuse Requirements

## 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)**

## SAEEnhanced service leak detection standards (J- 1627 enhanced  to J- 2791)

## 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 OEM’s and Government agencies to drive need for new equipment

## Implementation Motivation Issues

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

## 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

## Business Case Examples

- A few OEM’s have reviewed the options of implementing warranty reductions towards offsetting service tooling costs

## Current  A/C Warranty Process

- Labor
- 100’s 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

## Current  A/C Warranty Process

- Material
-  Refrigerant recovered is reimbursed to dealers @ 100%  vehicle A/C refrigerant capacity
- Government Regulation
- EPA mandates that mobile refrigerant _**MUST**_ be recovered and recycled

## Current  A/C Warranty Process

- Million’s 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

## Current  A/C Warranty Process

- Validated Example
- Labor operation  Over 12 months had 67,500 payouts (~142,000lb** @ $6.50* = $923,000)

*** Estimated warranty  national mean amount paid July ‘07**
**** Composite –90% 67.5k @2# + .10% 67.5k @3lb**

## 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 **

## 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

## Current  A/C Warranty Process

**$8.50 #**

**$6.50 #**

**$4.50 #**

## 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

## 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

## 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

## Today’s Reality...

- Current J-2210 is over 15yrs old
- Can’t be re-worked/retrofitted to meet new SAE J-2788 requirements
- Doesn’t 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

## ...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

## 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
- OEM’s reimbursing dealers only for Refrigerant loss (similar to current engine coolant policy)

## 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

## 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

## Vehicle Recycle  Industry

## “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

## “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

## “Out of the Box” service tool/procedures Vehicle Recycle  Industry

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

## 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

## Summary (cont)

- Industry Service Tools & Equipment Implementation
- Business cases drive OEM actions

## Questions?