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Implementing Mobile A/C Refrigerant Service Environmental Enhancements

Implementing Mobile A/C Refrigerant Service Environmental Enhancements. Jim Resutek OTB Consultants June 2008. Provide opportunity to implement new technology and enhanced dealer service capabilities with both environmental and cost benefits. Purpose. Key Topics.

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Implementing Mobile A/C Refrigerant Service Environmental Enhancements

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  1. Implementing Mobile A/C Refrigerant Service Environmental Enhancements Jim Resutek OTB Consultants June 2008

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

  3. Key Topics • Government/Industry Drivers • Current A/C Warranty Process • Industry Changes and New Technology Provide Cost Savings Opportunities for OEM’s • The Opportunity

  4. Government/Industry Drivers • Government • 609 Regulations • Technician Certification • Recovery & Reuse Requirements

  5. 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

  6. Enhanced Recovery/Evacuation/Recharge standards (J-2210 to J-2788)

  7. SAEEnhanced service leak detection standards (J- 1627 enhanced to J- 2791)

  8. 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

  9. 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

  10. 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

  11. Business Case Examples • A few OEM’s have reviewed the options of implementing warranty reductions towards offsetting service tooling costs

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. Current A/C Warranty Process $8.50 # $6.50 # $4.50 #

  19. 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

  20. 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

  21. 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

  22. 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

  23. …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

  24. 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)

  25. 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

  26. 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

  27. Vehicle Recycle Industry

  28. “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

  29. “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

  30. “Out of the Box” service tool/procedures Vehicle Recycle Industry • Enhance the residual payback • Segregate recovered refrigerant • Employ company wide standardization and purchasing

  31. 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

  32. Summary (cont) • Industry Service Tools & Equipment Implementation • Business cases drive OEM actions

  33. Questions?

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