LPG for hybrids?

Imagine halving the cost of running even the most frugal cars on the roads today. That's one possibility forecast by the CEO of LPG Australia, Michael Carmody, who has told the companies his association represents that they must look at any and all "niche opportunities" to reverse an industry-wide downturn in sales.

And one of those niche opportunities is to approach taxi fleets and offer LPG conversions for some of the petrol/electric hybrid cars that are beginning to replace the traditional Falcon and Commodore.

"It's about... looking at the shift in the market," Carmody explained. "Many areas in which LPG has had a traditional presence in various sectors of the market are changing — and we need to change with it.

"From a balance sheet perspective, the hybrid is offering very good value to taxi owners — and what we saw was a traditional market for LPG, now has a very highly competitive entry.

"However, what we should be looking at is that although these guys are now moving from Falcons down to Camrys — in a hybrid sense — we can actually add niche value in that space. We, in fact, can fit LPG systems to hybrids and actually give them even more economy.

"With every shift, there will be a challenge, but there's bound to be an opportunity in there somewhere. The boys have essentially got to get their technical hat off and get their marketing hat on — and say: 'right, how do we get this value proposition into potentially different segments of the market?'"

There are packaging issues with installing a gas tank in a vehicle that has already sacrificed much of its boot space for batteries, as Carmody freely admits, but it's his argument that the conversion industry has proved itself adept at dealing with technical problems over the years — and based on Toyota's latest Prius v, which stores its lithium-ion battery pack in the centre console, finding a place for a gas tank as well may not be such a quandary very much longer. And just as hybrids make do with smaller fuel tanks, a smaller gas tank could be accommodated in place of the conventional fuel tank — assuming the hybrid-drive vehicle could lend itself to a single-fuel LPG system rather than a dual-fuel setup.

The LPGA has not approached Toyota about gas conversions for any hybrid model in the company's range.

"Toyota wouldn't be my first cab off the rank, pardon the pun," replied Carmody, who explained that Toyota is embarked on a move away from internal combustion engines, making a "transition to EV" and fuel cells. That makes it a "hard target" for business development. But Carmody feels taxi fleets would be amenable to an appropriate marketing strategy.

"As long as it gets the performance and doesn't damage the engine, they'll run anything," Carmody observed of taxi operators.

Carmody's presentation at a conference last night, arranged by the Victorian Automobile Chamber of Commerce, offered what he described as "a call to arms" for the conversion industry, which has seen its sales base eroded over the past four years. Those attending the conference included businesses converting vehicles to run on LPG, plus representatives of the component suppliers for that industry.

"These guys are in the forward trenches... in terms of the autogas industry," Carmody told motoring.com.au. "These guys are the first to feel any upturn or downturn in the industry."

And lately the industry has been more downturn than upturn, it seems.

"The decline in vehicle conversions started occurring in 2008, which I guess was the heyday of vehicle conversions — and the conversions have been declining since that period, where today the market is doing it extremely tough... in terms of keeping that vehicle conversion industry a viable industry."

Carmody rails at any suggestion LPG has fallen out of favour due to recent price increases.

"I don't accept that; I mean, yes, over the last few months we've been struggling to explain the price hike in LPG, but prior to that we've been witnessing a downturn in the industry for the last three years.

"So to just jump on the fact that we have a price spike and that's the cause of the challenges we're facing at the moment... I think that's a bit of a long stretch."

If anything, the LPGA boss said, the problem for autogas is the consequence of newer players in the market.

"I think one of the challenges that we have in that alternative-fuel space — for want of a better term — is that some years back we were the dominant fuel in that space. People and the fleets were converting to LPG; it was offering great cost-effectiveness in terms of running/operating costs for the vehicle, et cetera. That space now has got quite a few competitors..."

Those competitor are hybrids, diesels, biofuel cars, and cars that run in 'smart ULP' mode, which Carmody describes as "some of the technologies they're bringing out on petrol engines these days that we hadn't heard of years ago". Numbered among those would be Ford's new Falcon EcoBoost.

"There are a whole host of factors behind this [downturn]. As an Australian motoring community, we're downsizing our cars; you've only gotta look at the sales of Holden and Falcon — look at that over the last couple of years... Australians are moving away from the traditional... bigger car. Some are moving off into the smarter SUVs, of which diesel has a very strong dominance in that place. And many are moving to smaller four-cylinder cars, and getting the sort of economy they're seeking.

"The natural inclination to get your Falcon converted to LPG may not necessarily be a driver these days...

"That's just one factor; there's probably at least another dozen factors that are sitting out there that are creating real challenges for the LPG industry."

Carmody acknowledges the challenges the industry faces, but remains upbeat. It's his role, he says, to have the industry wake up to the prevailing business environment and respond accordingly. He has a multi-faceted strategy for industry, involving reinvention of the fuel's marketing, improving the presentation of the fuel on service station forecourts and establishing closer ties with the local manufacturers. Importantly, given LPG has perhaps never quite shrugged off the reputation it's a bomb in the boot of the car, Carmody called for a national certification scheme for installers.

"The industry has got to make that call; if the industry wants a business-as-usual approach, then that graph will keep heading south," he concluded.

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