As many readers will be aware, the Autogas industry is ‘doing it tough’ at the moment as a result of a dramatic fall in sales of new LPG vehicles. Much of this decline is attributable to Australia’s remaining vehicle manufacturers preparing to close down their operations and transition their businesses to import models.
As a result, there has been a dramatic decline in the sales of new LPG vehicles (predominantly the Holden Commodore and the Ford Falcon) to the point that the number of LPG vehicles in the Australian fleet has fallen by almost 50% since 1 January 2010.
This fall in LPG vehicle sales has been accompanied by a 30% fall in Autogas sales in Australia over the same period, prompting some fuel retailers to rethink their forecourt strategy.
“Given the recent trends in Autogas sales, you could be forgiven for thinking that the days of Autogas may be numbered”, said ACAPMA CEO Mark McKenzie.
“But it is fair to say that any suggestions the Autogas industry is dead are somewhat ill-informed, given some recent developments in the Australian Autogas sector”, said Mark
Earlier this week, Gas Energy Australia (the peak national body for the LPG Industry) and the World LPG Association hosted a world summit to discuss LPG industry developments in the Oceania Region.
The Summit was attended by representatives from countries throughout Europe and North America, with economies such as the USA, Italy and Turkey reporting significant growth in the use of LPG within their national vehicle fleets.
A number of speakers suggested that the outlook for continued use of LPG for light vehicles was positive, given the continued fallout from the VW (and more recently Mitsubishi) scandals relating to emissions from diesel vehicles.
Authoritative presentations on new heavy duty engine technologies that combine LPG and diesel fuels (up to 25% LPG substitution) to provide cleaner burning heavy vehicles were also provided to delegates, including a programme being conducted by ELGAS in Australia.
If successful, these programmes will drive renewed demand for automotive LPG with one speaker suggesting that Australia’s current annual use of LPG could be doubled by converting just 30,000 of the nation’s 500,000 heavy vehicles to dual fuel operation (i.e. 6% of the fleet).
Yesterday, there were two further announcements that are worth noting for retail businesses currently selling Autogas.
The first was the release of a joint-government industry study that sought to quantify likely future demand for LPG vehicles if a new national conversion centre was established in Victoria to import vehicles from international vehicles and convert these vehicles to LPG in a large-scale manufacturing environment.
Jointly funded by the Victorian Government and industry, this study concluded that there continued to be strong demand for LPG vehicles amongst fleet buyers as long as the additional cost of the new vehicles was maintained at around $1800 above the equivalent petrol variant.
“It is understood that, in light of the study findings, the Victorian Government and industry stakeholders are now likely to examine the business case for establishment of such a facility in the near future”, said Mark.
“It is ironic that, as governments strive to encourage use of alternative fuels, we have two State Governments pushing biofuels with requirements for fuel retailers to invest in new infrastructure while existing assets for LPG lay idle as a result of a lack of government support”, said Mark.
Also on Thursday, UNIGAS announced that it had entered into a new partnership with Fuel ‘N’ Go for the sales and marketing of LPG to the nation’s independent fuel retailers.
The new partnership takes advantage of the supply strength of UNIGAS – Australia’s leading supplier of LPG products – and the petroleum sales and marketing expertise of Fuel ‘N’ Go’s Jeffrey Griffiths and Nic Moulis.
The partnership is expected to result in a renewed focus on Autogas in advance of an anticipated increased demand for LPG in the next decade, as a result of the light vehicle and heavy duty vehicle initiatives detailed above.
All in all, the developments are welcome news for a segment of the Australian fuels market that has been under significant pressure as a result of declining sales in recent years.