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

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