LPG: Still Cheaper And Cleaner, But What's Happening Here? Photo:
Trevor Collett | Apr, 08 2013 | 21 Comments

In no other sector of the automotive industry do we see quite the tale of two halves that we see when it comes to LPG.

On one hand, sales of after-market LPG conversions have plummeted. And by far the biggest block of LPG customers – taxis – are starting to slowly, but demonstrably, gravitate towards hybrid powered vehicles.

On the other hand, sales of new vehicles with factory fitted LPG experienced a very healthy increase in 2012, that has continued into 2013.

But problematically for the industry, it is fair to say that these gains can be attributed to two vehicles that are in sales decline; the Ford Falcon and the Holden Commodore.

Liquid Phase Injection

For Ford Australia, the Falcon EcoLPi has been universally praised. It drives like a petrol six, perhaps better.

It is a credit to Ford Australia that it has produced an LPG-powered vehicle with some serious technology included in the purchase price – its Orbital developed liquid phase injection system - rather than just less space in the boot.

That said, the Falcon does come with slightly less space in the boot (and adding a full sized spare will cut it by about one third) and the minor inconvenience of having to refuel more frequently, thanks to a 22% increase in fuel usage compared to the petrol engine.

Ford claims 12.3 l/100km for the base model XT LPi and 9.9 l/100km for the six cylinder petrol XT.

To purchase an LPG powered Falcon will cost you around $2,500 more than the petrol model, but the Federal government will refund $2,000 of that after your purchase (under a scheme capped at a maximum of 25,000 claims per year).

However, the rebate scheme has just 16 months left to run.

LPG - The Savings

This would be a good time then to talk about the savings in fuel costs over a year should you decide to purchase an LPG-powered vehicle.

To work out the savings benefits, Ford has a sliding scale calculator on its website, based on an average annual distance of 15,000 km.

I have no reason to argue with this equation, but if you plan to try it out make sure you bump up the LPG price a bit as the default setting it too low. It’s been hovering around 75cents in city servos but can be as high as an extortionate $1.05 per litre in some rural areas.

So, if much of your travel is away from populated areas, you will need to factor in higher LPG prices on the Ford calculator.

The calculator tells me that the Falcon sedan running on petrol at $1.50 per litre will cost $2,228 per year in fuel whilst the LPG engine will cost $1,476 when I set the price to 80 cents per litre.

This represents a saving of $752 per year. Factor in the $2000 rebate and the savings are considerably higher.

That’s not to be sneezed at for a car that drives transparently as well as its petrol counterpart, with no loss of performance nor dynamic feel.

The Retro-Fit Situation

With LPG a plentiful fuel in Australia – we have ample to satisfy demand for the next 40-50 years without new major finds – perhaps we should be bringing more pressure to bear on government to ensure the rebate remains.

Down the road from the Ford dealer is the mechanic in the suburban automotive LPG workshop. He’s likely to be a member of the AAFRB (Automotive Alternative Fuels Registration Board) – responsible for the oversight of installers and repairers and certification of members.

He was rubbing his hands together back in 2006 when then Prime Minister John Howard announced a $2,000 subsidy for the retro-fitting of LPG systems to vehicles.

The industry went mad. At the height of the boom, there was up to a six-month wait on orders for popular Holden Commodore tanks and conversion kits.

Fast forward to 2013 and the feast is over.

Reduced Rebate And Other Challenges

Under the current government, the subsidy for retro-fitting has been reduced in increments to $1,000 and it is also due for the scrap heap in 2014.

TMR spoke to three prominent LPG workshops and got mixed responses but similar themes.

A workshop in country NSW, Ecotune Automotive Services from Bomaderry (near Nowra, http://www.gas-conversions-nowra.websyte.com.au/) reported that the retro-fitting business was very quiet, stating that the main problem stemmed from the popularity of the introduction of the rebate in 2006.

“Everyone around here who wanted to switch to LPG has already done it,” the owner and manager, Steve Mott, said.

A workshop in Sydney, Newgas in Taren Point (newgas.com.au) also pointed to the saturation caused by the initial rebate and now made worse by high LPG prices; here, and in international markets, LPG is pegged to the Saudi Aramco Contract price (despite our plentiful supplies at home).

But another Sydney workshop, The Gas Man in Seven Hills (http://thegasman.com.au/), was more positive. Robert, the manager, said that his workshop was still busy but the industry overall was still “down”. He said that he was fortunate to have previous satisfied customers returning to his business but blamed the general state of the economy for a lack of new customers.

Two of the workshops contended that the main reason for the decline was the actual cost of delivering the service.

Modern vapour injection and liquid injection methods have pushed the cost to convert an average Holden Commodore V6 sedan beyond $4,000.

We spoke to Operations Manager, Tony O’Mara at the AAFRB in Melbourne.

He summed up the state of the after market industry in Victoria beautifully, by saying “We had our best year in 2008 when we issued 48,070 compliance plates for LPG conversions. In comparison, last year we only issued 6,040 plates."

Mr O’Mara said that the rise of small car sales, such as the Mazda 3, were also hurting the industry and pointed out that until recently, there was no suitable conversion kit for the SIDI V6 Holden Commodore engine.

The Hybrid Effect

Of course, the taxi industry has a significant part to play in any discussion on the future of LPG. Many are now turning to hybrids – it’s not a flood, but significant.

In slow-moving stop-start city traffic, a hybrid can offer the same or greater savings as LPG. The fear of astronomical battery prices has abated, as it has been widely reported that the current Toyota Camry hybrid battery-pack is now ‘only’ $3,200 (give or take).

I recently rode in a hybrid taxi that had only been in service for ten days (the freshest taxi I’ve ever been seated in), and the driver (also the owner) was keen to tell me about his recent purchase.

“I am already saving $15 a day in fuel,” he said. Assuming 365 days-a-year service, and assuming the information he gave is accurate, that’s $5,475 in savings.

LPG/Hybrid Taxis

But even that figure can now be bettered for taxi owners.

Both Tony from the AAFRB in Melbourne and Robert from The Gas Man workshop in Sydney spoke of the emergence of LPG powered hybrid Camrys being used as taxis. The Gas Man has booked their first conversion in for a few weeks from now.

The combination of savings with LPG and hybrid technology at work will likely prove very enticing for taxi operators.

No doubt the other hybrid taxi owners will be eagerly awaiting reports from their colleagues in the industry brave enough to take this plunge.

The 'Tradie' Ute

Lastly, the growth in sales of the diesel twin-cab ute as the car-of-choice for ‘tradies’ has also knocked the industry about. Once upon a time, Ford and Holden one-tonners ruled, often with V8 engines under the bonnet and a gas tank slung under the tray.

Now, go to any building site, and you’ll struggle to find one between the rows of Nissan Navaras, Toyota HiLuxes and Ford Rangers.

The Excise Hit Coming

What then will happen to LPG if the slow transformation of the taxi industry into non-LPG hybrids gathers momentum and diesel sales of larger vehicles continue to grow?

Even if sales of new LPG vehicles continue to improve, they will hardly put a strain on supply. And how CAN they improve when the two major players, Ford’s Falcon and Holden’s Commodore continue to lose market share.

One thing the industry does not need is the planned increase in excise on LPG that the Federal government is chasing – excise on LPG is to rise to 12.5 cents per litre in 2015.

That may be the last nail in a struggling industry. And what folly – LPG is not only a ‘greener fuel’, Australia has lakes of it.

We import most of our petrol. Imagine the benefit to Australia’s balance of payments – and economy generally – if half the cars on the road were running on cleaner-burning, plentiful, Aussie-produced LPG.

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