Ford backs LPG over hybrid

A SENIOR Ford Australia executive has questioned the value of building a hybrid car locally, saying that Ford’s own dedicated LPG Falcon is a better proposition for the company and for consumers.

In the wake of Toyota’s announcement that it will build a hybrid Camry locally, Ford Australia sales and marketing chief Mark Winslow said last week that residual values would be a huge deterrent to private and non-government fleet buyers.

By contrast, Mr Winslow said that the Egas Falcon costs $350 a year less to run than a Toyota Corolla and now has a resale value that is even higher than a regular petrol-engined Falcon – something that has changed dramatically in the past two years.

And, seemingly putting to rest a suggestion that Ford Australia might consider developing a hybrid Falcon, Mr Winslow said that the company was satisfied with its commitment to E-Gas, more diesel-powered variants (including Falcon) and small-capacity turbocharged petrol engines.

“The question on hybrids is going to be, if a (fleet) company wants to go for a hybrid technology, what will the residual be? And who will the used car customer be? If the residual is low, then the business equation starts to get out of shape,” said Mr Winslow.

“It took people a while to get over the ‘bomb in the boot’ kind of thing (with LPG), so are people going to think more clearly about hybrid cars? Or is it going to take a gestation period, with concerns over the cost of the batteries, the disposal of batteries, the maintenance costs and whether it’s going to be worth anything as a used car when it’s six years old? “A lot of it comes down to the non-private market and the used vehicle market. If a company is going to go hybrid, what residual value is the fleet management organisation going to then put on it after three years? Then they would have to ask, who’s going to buy it? Who will be the customer for a three-year-old hybrid?” As for the government’s promise to buy Camry hybrids for its own fleets, Mr Winslow rhetorically asked if they would be additional sales or simply substitution for Toyotas that the government already buys.

“Hybrid is not the only alternative technology,” said Mr Winslow.

“Dedicated Egas is where we’ve been and where we will continue to be, our diesel line-up gets stronger all the time – we’ve got more diesels in our future – and, in the medium-term, the technology being developed within Ford in terms of low-displacement, high-output, very fuel-efficient petrol vehicles is clearly something we have the option of adopting here in Australia.

“We’ll continue to push E-Gas. We can always do more, particularly now that people have very much accepted it. We’re the only ones that make it down the line, so it’s a factory-fit job, and I believe the resale value is now beginning to reflect that.

“Egas has been a great success and, from a green point of view, our credentials based on Egas are very strong. With more diesels and low-displacement boosted engines, we think we’re very well-hedged as a motor company in terms of wherever the marketplace should go.” Mr Winslow said that LPG has overcome the image problems it had five to 10 years ago and that consumers have now embraced E-Gas.

He said that, when Ford started selling LPG-equipped Falcons, their resale value was $1000 less than a normal Falcon. However, he said that a BF will now bring on average $2500 or $2600 more if it has E-Gas and that this shift has taken place in the past two years.

In 2007, 15 per cent of all Falcon sedans were ordered with E-Gas, but the take-up rate was even higher for wagons (41 per cent) and utes (37 per cent).

Ford Australia, perhaps surprisingly given the recent rises in fuel costs, does not expect demand for E-Gas Falcons to increase greatly – and has no plans to promote gas-powered Falcons specifically – but the company is ready to meet an increase in demand.

“When we did our planning years ago, we didn’t (foresee a bigger demand), but clearly petrol prices have moved since then,” said Mr Winslow.

“We’ve equipped ourselves so we can supply more E-Gas Falcons. Until we see the demand we wouldn’t move, but we wouldn’t need six or 12 months to turn around – it can happen very quickly.” Ford has no plans to produce an Egas Focus when production of the small car starts here in 2011 because the diesel version has such good economy, but plans are still in place for a diesel-engined Falcon in 2010.

Mr Winslow admitted that Ford had been caught out by demand for diesel in the Mondeo range and has ordered more to meet a backlog of orders.

Supply started coming through in May – which helped Mondeo to its best month yet with 2011 sales – but the back-orders are not expected to be fully cleared until August.

The success of the diesel Mondeo has also “given currency” to the argument for bringing the Mondeo wagon to Australia, Mr Winslow said.