Federal Government LPG Incentive Scheme Ends

Trevor Collett | Jul 1, 2014

The Federal Government’s LPG incentive scheme has officially come to an end, with vehicles purchased or converted after June 30 now ineligible.

Introduced by then Prime Minister John Howard in 2006, the scheme was initially designed to promote sales of locally-built LPG-powered vehicles, and to offer families some relief from rising fuel costs.

Initial uptake was strong, with LPG workshops reporting a wait of up to six months for conversion kits and tanks to suit Holden Commodores.

But the rise in popularity of small cars since 2006 and the winding-back of the scheme since 2011 will see it depart with a whimper, rather than a bang.

Since July 2011, the scheme has been capped at 25,000 eligible claims per financial year, with a deadline of 12 months for private owners of new or converted LPG vehicles to apply for the grant.

That means owners of new or converted LPG vehicles who ‘scraped-in’ before the June 30 deadline this year will still be able to apply for the grant until their 12-month deadline expires - but only until the 25,000 grants allocated for 2013/14 have been exhausted.

Whether or not all of the 25,000 grants will be claimed for 2013/14 is a question in itself (and highly unlikely), with sales of new LPG-powered passenger and commercial vehicles registered for private use in Australia only reaching 108 so far in 2014 to the end of May.

Last year, a combined 532 private LPG vehicle purchases were made in Australia, while the figures were slightly healthier in 2012 with 725 sales.

Only Holden and Ford currently offer LPG-powered vehicles from new in Australia in the form of the large-sized Commodore and Falcon in sedan and ute form, while Holden also offers LPG engines in its Sportwagon and exclusively in its V6-powered Caprice.

Both local carmakers were previously using the government rebate as an incentive to plug the ‘gap’ in price from their base model petrol-powered variants to the LPG-powered versions.

The step-up for Commodore and Falcon buyers to LPG over their respective base models is around $2500; an amount that now receives no sweetener from the government and must be factored into future fuel-cost savings for most private buyers to justify the switch.

LPG buyers also have to contend with more frequent fuel stops, slightly smaller boots and a full-sized spare tyre (or any spare) is optional in some cases.

The end of the incentive scheme is unlikely to lead to any reduction in pricing for LPG variants from Holden and Ford. Ford is also no certainty to continue its LPG line, given it offers the four-cylinder EcoBoost engine as a no-cost option.

Holden however offers its V6-engined Caprice in LPG form only, so the Commodore LPG variants should be safe for now.

Exact figures for private LPG conversions on existing vehicles are unavailable but LPG workshops were reporting a decline in sales midway through last year, and only 5887 total claims from the 25,000 available in 2013/14 were estimated for the 11 months to the end of May.

Over the life of the scheme until the end of May this year, a total of 317,847 grants had been issued at a total cost of over $594 million.

The LPG industry may not die along with the rebate however, with a government-backed feasibility plan already exploring the potential for “world-class” LPG conversion facilities.

The plan, proposed by Gas Energy Australia and the Victorian Automobile Chamber of Commerce would create around 500 jobs and aims to boost the appeal of LPG in Australia once more.

Watch this space.

MORE: LPG news, Federal Government news

Filed under: Featured, Holden, vacc, fuel, fuel prices, ford falcon, ford ecoboost, holden caprice, holden commodore, manufacturing, federal government, lpg, holden sportwagon, News, LPG rebate, 2014, ford, industry, ford falcon ecolpi, gas energy australia

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  • MotorMouth says,
    4 months ago
    4 likes
    I really can't understand why anyone would choose disiesel power over LPG, nor why LPG isn't hugely popular in a country that has enough of the stuff to run every car on the road today for 100 years.
    • Phil says,
      4 months ago
      3 likes
      Torque is the simple answer biggrin
      • martin says,
        4 months ago
        3 likes
        what, the additional torque of my LPi Falcon ute is a problem Phil?
    • matt says,
      4 months ago
      2 likes
      im not going to make a long argument with you this time just these couple of points and thats it. 1) LPG outside of the city limits where you lot live is near enough or just over $1 a litre, ruling it out as a choice for those in the country. 2) the only cars brand new from a factory are 6 cylinder cars, ruling it out for city dwelers. 3. Those cars CHEW the gas. Finally, people are scared that LPG is not everywhere like diesel is. I agree with you its a good fuel, it just has to many factors working against it.
  • donk1 says,
    4 months ago
    1 like
    It's a combination of many things. Torque is definately one issue, LPG is not available in a lot of towns & many rural centres, and places initially that did have service stations with LPG are now taking the equipment out as the cost of leasing dispensers, fuel bullets etc were far higher than what was being sold. Then you have to look at the fact that actual savings once conversion & rebate have been taken into consideration as well as the fact that LPG now has the fuel excise added,means that any savings are wiped out.You also use more fuel over a given distance, you have to refuel more often, service costs on LPG vehicles are a lot higher, & there is more to go wrong. Why would you add an extra 80-100kg in weight to your vehicle with the tank & fuel! I own a diesel car. I fill it every 5 wks. Do over 1000km average out of a tank, service it twice a yr with an average of $800 total servicing costs, & do around 25,000km-30,000 a yr. If you are doing under 25,000km annually stick with petrol, and anything over that, go diesel. But LPG no longer makes any economic sense.
    • martin says,
      4 months ago
      5 likes
      true that the cost advantage is over now, but LPG is much cleaner and safer than diesel. i have a Falcon LPi which costs the same as an average 1.6~2.0 litre car to run. we are a stupid country not capitalising on the gas we have, instead selling it cheap to foreigners, then costing it against world market prices. we are one of the most energy rich nations yet we have the highest prices for energy (that's all energy sources).
  • donk1 says,
    4 months ago
    The other issue is perception! Many people believed that LPG wasn't too safe to handle as well as the refuelling issues. Only Ford , Holden, Mitsubishi, & Toyota took the gamble on manufacturing factory fitted LPG systems. The main take ups were taxis & fleet buyers. Sales were so minimal within the general population that it eventually became no longer worthwhile to continue producing them. Currently, LPG cars have only accounted for about 1.5% of total new car sales as opposed to 38.5% for diesel, 12% hybrid & the rest petrol. The first cars to use LPG were taxis in 1973. Now virtually all newer taxis are a combo of hybrid, diesel, petrol, as no more factory LPG vehicles are manufactured. It maybe possible as a special order only or add an aftermarket system. Now the rebates gone, there is no reason to promote its use.
    • martin says,
      4 months ago
      Well, the Victorian Government is now investing heavily in the LPG vehicle conversion industry. I think it a good idea, but I wonder why?
      • Balthazaaaaaargh says,
        4 months ago
        1 like
        not investing, they're investigating.
  • Bob says,
    4 months ago
    1 like
    Motormouth and martin are totally correct. In Australia we've been lead by the ears to believe diesel is the way to go. Totally wrong, yes it provides good torque but so does anything else running a turbo and just as efficient on fuel. The downside with DIEsel is the issue with nano particulates that get emitted en masse every time you press the accelerator. These are a leading cause of cardiovascular disease and including lung cancer...if you don't know HEART DISEASE is the number 1 killer.

    What we really should be driving here are CNG cars, it would be sooo cheap you wouldnt believe it. CNG is natural gas the same stuff you use for heating and cooking.
  • donk1 says,
    3 months ago
    Problem with CNG & LNG is storage and infrastructure. Any vehicles operating on these fuels will have a substantial premium added over their original purchase price. Both fuels are clean & green, but unfortunately any cars that are able to use these fuels are not economical. I am of the impression that around 70 litres of these fuels only gives you a probable range of 250-300 km on a tank. You would need a substantial sized tank for a decent touring range, & currently for cars at least , nothing is available. Neither CNG/LNG is available outside of capital cities. Until it becomes more widespread, diesel is the choice currently for around 40% of new car buyers, hybrids for 10%, LPG for 1.5% & petrol the rest.
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