The Australian AutoGas Industry has been hit by a ‘perfect storm’ in recent years as a result of changes in government policy, rapid growth in sales of new diesel commercial vehicles, and recent announcements of the imminent closure of car manufacturing plants in Australia. But suggestions that the $3B AutoGas Industry is ‘dead’ are not only premature – they are clearly wrong.

There is no question that sales of AutoGas have declined in recent years. This decline can be attributed to a number of factors that have combined to reduce consumer demand for LPG vehicles – both LPG conversions of existing vehicles and purchase of new LPG vehicles.

“The recent Holden and Ford manufacturing closures that have shutdown Australia’s only locally-produced LPG vehicles, together with changes in government policy, have been compounded by the growth of new diesel vehicle purchases that accelerated the decline in LPG vehicle demand,” Elgas’s General Manager for Unigas, Cameron Ure said.

Doubts about whether Australia will continue to enjoy good supply of LPG have also been raised by some industry commentators, who suggest that supply of LPG will likely decline as Australia’s refineries are progressively converted to fuel terminals for storage of imported fuels.

Such suggestions, however, fail to recognise that new supply is being sourced by the growing development of Australia’s LNG industry (i.e. LPG and petroleum condensate are extracted together with natural gas from gas reserves and are then separated from natural gas during the clean-up process).

By 2018, it is estimated that natural gas field development in North-Western Australia will produce more than 2 million tonnes of LPG per year for the Australian market.

“The real question for operators of more than 3000 service stations that sell LPG is whether the AutoGas industry can do anything to stimulate growth in LPG vehicle demand in the near future,”  ACAPMA CEO Mark McKenzie said.

Within this context, the Victorian Treasurer Tim Pallas recently announced that the Andrew’s State Government has partnered with industry to investigate a concept for establishing an LPG vehicle production plant in Geelong.

The four-month study will assess the feasibility of establishing large-scale dedicated vehicle manufacturing and conversion facilities and also evaluate the benefits of setting up a Centre of Excellence for LPG vehicle research and technology innovation.

The development was applauded by the AutoGas Industry as it is good news for an industry that has been toughing it out more than most in recent years.

“We welcome the Victorian Government’s partnership with the industry to identify solutions that deliver efficient and effective economic benefits. We will work diligently to identify new, innovative technologies that will deliver substantial benefits to industry and the community,” Cameron Ure said.

The innovative partnership between the Victorian Government and the AutoGas Industry also augers well for the near term future of AutoGas sales in Australia.

“While most other governments merely talk about the benefits of increased use of gas in the national vehicle fleet, the Victorian Government has put its money where its mouth is and shown strong and positive leadership on an important issue for our industry,” Mark McKenzie said.

“This innovative project could potentially deliver significant benefits in terms of (a) employing workers displaced from the closure of Victoria’s car manufacturing plants, (b) making modern next generation LPG vehicles available to Australian motorists, and (c) better utilising the nation’s existing $3B investment in LPG refuelling infrastructure.”

The Victorian Government Development – and other measures currently being pursued by Unigas to bring leading edge, market-proven LPG vehicle technologies to the Australian market – suggest that any talk of the AutoGas being ‘dead’ is clearly wrong.

The AutoGas industry merely appears to be taking time out to reinvent itself.