Is the use of LPG evaporating?

By intouch posted 10 days ago

  

For a long time, LPG was seen as a clean and cost effective fuel for fleet vehicles and cost conscious mum and dad drivers – but is this changing?


According to finder.com.au, there are 35,000 (9.2%) fewer LPG vehicles registered in 2017 compared to 2016 and 146,750 (29.9%) fewer compared to 2012.

So, what’s driving this change? ACAPMAg reported back in 2015 that there could be a perfect storm of government policy, manufacturing downturn and increasing sales of diesel commercial vehicles that would impact LPG demand. Beyond this, the price differential that used to make LPG an attractive option is now less clear.

RACV notes, “The end of generous government incentives in 2014 also hit the LPG industry hard, while others point to the excise applied to LPG since 2011, which increased prices and meant that it takes longer to pay back the price of conversion." 

Ford manufactured their “dedicated gas” Falcon which was a popular option among fleet operators and the taxi industry. Similarly, Holden had their LPG Commodore solution. But with local manufacturing coming to an end, so do these LPG variants. LPG conversions have also reduced dramatically.

RACV reported in 2016 that “Victorian figures supplied by the Automotive Alternative Fuels Registration Board show that between 1993 and 2009 on average 27,000 vehicles were converted to LPG annually, with yearly highs of up to 50,000. But for the last three years that average has dropped to just 2535, with 2015 an all-time low of 1475”.

These days there is also a greater number of alternatives. Diesels across all categories, hybrids and plug-in electric vehicles all provide options to fleet operators. Just look at the number of hybrid taxis on the roads.

So, what does this mean to operators of LPG vehicles? Well the number of service stations providing LPG is reducing as demand diminishes and therefore sourcing LPG could become increasingly problematic. What about residual values? While you might think all this might drive down the price of a second LPG vehicle, Glass’s data demonstrates a different story. A 2015 Ford Falcon sedan operating LPG has a retail value approximately 14% higher than its petrol counterpart and around a 2% premium as a utility.
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