Can LPG save local car makers?

Against a backdrop of total declining vehicle sales over the last year, LPG vehicle sales have been on the increase. With the implementation of the Federal Government’s ‘A New Car Plan for a Greener Future’ scheme, this is a trend set to continue.

In 2008 the media lauded another bumper year for Australian new motor vehicle sales, with over one million units sold. However there was little mention of the total market decline of 3.6 per cent, or 37,818 fewer vehicles sold compared to 2007. Nor was there mention of the decline in Australian-built vehicles on offer against the ever-growing wave of imported vehicles on the market.

Ford, Holden and Toyota together, sold 21,377 fewer locally produced cars in 2008, another fall on the back of a regular annual slide as buyers opt for smaller imported vehicles. In 2002, locally built cars represented over 30 per cent of the total Australian passenger vehicle sales. In 2008, local car sales accounted for just 16.9 per cent.

Bucking these declining trends, LPG vehicle sales, were up by 3.6 per cent in 2008, mostly due to the sale of Ford’s Falcon E-Gas option and supported by Holden’s Dual Fuel Commodore. Aftermarket LPG installations have also been on the increase; sales were up by 20 per cent in 2008, buoyed by government grants for private motorists to convert their vehicles.

An increased role for LPG

It was against this background that, on 10 November 2008, the Prime Minister announced a doubling of the LPG Vehicle Scheme grant for new vehicles to $2,000 as part of the Federal Government’s A New Car Plan for a Greener Future.

The new vehicle grant was increased to provide a larger incentive to encourage the three local car makers to further develop new LPG fuel-injection technologies, which lower running costs and cut carbon dioxide emissions.

The LPG industry believes that doubling the grant is recognition of the potential for LPG Autogas fuel systems to play a more important role in the greener future of Australian-made cars.

LPG Autogas-powered vehicles emit significantly fewer greenhouse gases and other pollutants than petrol-powered equivalents, including around 10 per cent less carbon dioxide.

For factory built vehicles, where it is possible to fully integrate the LPG system and combine this with other technologies, further carbon dioxide reductions and fuel efficiencies are possible.

LPG vehicles in the works

So where do the car makers sit on this incentive and what do they think of LPG? All three have recently commented on their intentions.

Ford has flagged LPG as a significant option for future Falcon models. The company’s LPG options already account for a quarter of its passenger vehicle sales and close to one third of light commercial vehicle sales.

Holden Managing Director Mark Reuss has reportedly been looking into an LPG-only option for the Commodore as part of the company’s new Eco-Line series.

Toyota Senior Executive Director David Buttner has also been rumoured to be seriously considering LPG again for the Camry and Aurion models after they were dropped in 2006, with only the HiAce option retained.

All three companies are understood to be investigating the newer LPG technologies, which include both the vapour and liquid injection system variants. These new LPG injection technologies are used widely by Ford, Holden and Toyota in overseas vehicles, providing improved fuel and emissions efficiency and emissions while maintaining, and in some instances boosting, power and torque compared to the petrol equivalents.

While overseas vehicles have enjoyed these latest LPG technologies for a decade or more, Australia continues to lag behind.

LPG injection provides an opportunity to maintain the larger locally built vehicle options used by many Australian motorists but with a small car’s running costs and emission profile. Wider adoption of LPG Autogas power in regard to vehicle options will help local car makers to be competitive against the growing tide of smaller imported vehicles.

LPG for a greener future

Consumer acceptance of LPG is growing on the back of increased public environmental awareness and exposure to the benefits of LPG as a vehicle fuel. LPG Autogas is Australia’s most widely distributed lower-carbon alternative fuel with pumps at approximately half of Australia’s 6,500 service stations, including good rural coverage.

Australia has huge natural reserves of LPG and, while also being a net exporter of the gas, greater domestic use has the potential to reduce Australia’s dependence on imported oil.

In addition, the Federal Government’s recent $1.3 billion Green Car Innovation Fund provides even more incentive to adopt the latest LPG technology in locally built cars.

With all the right conditions, surely now is the time for local car manufacturers to act on LPG Autogas options in order to rebuild local car sales and steer away from a dependence on import.

The Green Car Innovation Fund

The $1.3 billion Green car Innovation Fund, as part of its A New Car Plan for a Greener Future, will provide assistance over ten years to design, develop and manufacture low emission, fuel-efficient cars and components in Australia.

Funding will commence from 1 July 2009, with assistance to be in the form of grants allocated through a selection process that considers the innovative, technological, commercial and environmental merits of each proposal.

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