HSV kills diesel but gives LPG the green light

Holden Special Vehicles has confirmed it has dumped diesel plans and will go into production with a range of LPG-powered vehicles from early next year. But the company has admitted it has an uphill battle on its hands reversing LPG's "taxi image" and convincing dealers that it is a viable alternative to power its performance cars.

"We are going ahead with an LPG option which we will call LPI and we should see cars available in quarter one next year," said HSV managing director Phil Harding at the launch of the E2 range this week.

"We've got vehicles undergoing cold weather testing as we speak and we've got engines on test beds."

HSV is looking to make LPG optional on most of its range -- including the high performance flagship GTS and Maloo ute. Only the R8 Tourer will miss out, because the gas tank takes up too much cargo space.

"The tank will be fully trimmed, it [the boot] will be fully carpeted, so when you open the boot you won't see the tank," he said.

HSV considered putting an LPG tank in the spare wheel well of its cars, but the tank would be smaller in capacity and therefore provide less driving range.

"The VE boot is pretty big any way," Harding said. "In a sedan with an LPG tank you can fit two golf bags instead of three."

HSV says there is no performance reduction with its LPG-powered cars and that the system switches seamlessly from petrol to LPG.

"When you floor the throttle it automatically goes back to petrol," he said. "Those who've driven it say you can't tell when it switches from LPG to petrol and vice versa. It's seamless."

Harding wouldn't reveal how much the LPG versions of its cars would cost but said: "on typical mileage and at the current cost of LPG the system pays for itself in about 12 months."

The HSV boss also revealed that HSV dealers are yet to be convinced they can sell LPG-powered versions of Australia's favourite performance sedans.

According to figures from the Federal Chamber of Automotive Industries, sales of LPG cars to private buyers are down by a massive 70 per cent in the first eight months of this year, compared with the same period last year -- a paltry 128 cars, down from just 428.

"I've done the survey with my dealers and they don't want it," Harding said. "And I've said I don't believe you. And so we're doing this program without a solid customer demand for it. But I know we started this program when fuel was $1.60 per litre and heading north. Does anybody want to speculate that won't come back?"

Mr Harding said HSV had to do the LPG program to ensure the company had an alternative fuel in its lineup.

"My philosophy is I've got to have that [LPG] in the cupboard. To start off with, if people don't option it that's fine, but there'll come a point where they will. Because there's 100 years [supply] of LPG in Australia and so it will become accepted."

LPG isn't necessarily more economical than petrol -- in fact you need to burn more of it than petrol to travel the same distance -- but its appeal lies in its price, which at the moment is less than half the cost of unleaded petrol. Interestingly, HSV is going down the LPG path even though its own surveys show that its customers don't care about petrol costs as much as regular car owners do.

HSV marketing manager Paul McDonnell said: "We've got customer research that comes back to us. I can absolutely say that [fuel economy] is not in the top 10 of the requests that we get from customers for future product."

However, Harding added: "As the managing director of HSV I've got to say 'yes, my customers are interested in fuel costs and yes they would warmly embrace an opportunity to spend less on their cost of ownership'.

"What's importance to us is that [our customers] feel they have permission to buy the car. His kids come home from school with green teaching, his mates probably have different means of transport and there's going to be a social comment about what he's driving. It's all about giving our customer permission from peers to buy the car."

HSV has canned its diesel development program after years of trying to make a business case for an export program. HSV revealed that it had been in talks with a European maker of a diesel engine but wouldn't say which one or what type of diesel engine it was.

But the company did say it was "niggling" away at getting the diesel engine installed on the Holden production line (rather than at HSV as with the W427) and had been working on getting the foreign engine and gearbox to "talk" to the Holden Commodore's onboard computer systems.

"We got very close but in the end the numbers didn't add up," Harding said.

"We genuinely did look very seriously at diesel. In fact we're still running a prototype with a European diesel in it. [But] the diesel fell over for investment and return and the LPG car didn't."

HSV has also ruled out a return of V6 power to its range -- for now.

"I haven't found a single six-cylinder product that powers the car to a performance level that's more economical than our high compression ratio, light weight, uniquely packaged, V8 engine," Harding said.

"We've looked at six cylinders and I can't find a solution at the moment.

"If you want a car that performs, you've got to put the power out, and you've got to burn fuel.

"We did a six cylinder in the past; we might go to six cylinders again, but only when we've found a solution to making the car perform at a good economy level," Harding said.

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