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Car-makers fail to back LPG subsidy

Gassed: More than 120,000 vehicles have qualified for the LPG subsidy in less than two years

Holden and Ford put profits before the environment by failing to back LPG subsidy

General News logo5 May 2008

FORD Australia and GM Holden are not worried that the existing LPG subsidy could be scrapped in the upcoming budget.

While the federal Liberal party, VACC and LPG Australia have all voiced their opposition to the potential axing of the LPG assistance scheme for private customers, Ford and Holden do not share their concerns.

As of April, 120,231 people had qualified for the subsidy that was introduced in August 2006, but fewer than 1500 of those bought new cars that could run on LPG.

More than $239 million has been handed out under the scheme so far. Grants are available for private customers who buy a new car running LPG or have a used car converted to run on gas.

Under the scheme, private customers get a $2000 subsidy for having their used car converted to LPG and receive $1000 for buying a new vehicle that runs on LPG.

In an interesting twist, the new dual-fuel VE Commodore LPG attracts a $2000 subsidy because the conversion work is done by HSVi at Holden's Elizabeth plant near Adelaide where the car is manufactured, even though it is still technically a new car.

Single-fuel E-Gas Falcon models only qualify for a $1000 subsidy because the LPG work is done in-house at the time of manufacture.

This detail has not had much of an effect on sales, with Holden previously admitting the LPG Commodore, which was introduced with the VE Commodore in 2006, was not selling as well as expected.

Holden said that LPG cars accounted for around 5 per cent of Commodore sales last year, and only a very small percentage of those were private sales.

GM Holden spokesman John Lindsay said the removal of the LPG subsidy would not be a big issue from its perspective.

"From our point of view there would not be a huge impact on our sales of LPG," Mr Lindsay said.

"Our main customers are fleet buyers and police. There's not a huge amount of private LPG customers." Ford Australia has more heavily invested in LPG technology and is the only car-maker to build an LPG-only vehicle.

80 center imageLeft: Australian automotive engineer Dr Laurie Sparke.

Sales of LPG cars account for around 25 per cent of Falcon production, but very few of those are sold to private customers.

Since the grant was introduced, less than 1000 new Falcons running LPG have been sold privately.

As a result, the company is not worried about the potential end of LPG subsidies.

"While it is something we are supportive of, the benefit only relates to private buyers," said Ford Australia spokesman Edward Finn.

"The number of private people who purchase a new vehicle with LPG is minimal." GoAuto exclusively reported in March that leading Australian automotive engineer Dr Laurie Sparke advocated increased use of LPG and CNG in Australia to reduce the country's dependence on foreign oil and to reduce harmful emissions.

Supporters and stakeholders of the LPG industry have since seized on his comments in a bid to have the LPG subsidy maintained, with LPG Australia issuing a press release quoting Dr Sparke, who holds a view that money would be spent to better develop LPG for new cars as well as converting existing petrol cars.

"In Victoria, for example, the average age of cars on the road is 11 years and many use old engine technology and are poorly maintained," Dr Sparke said.

"Simply mandating the replacement of old cars with new, more efficient ones would be inequitable and unaffordable - and the greenhouse emissions caused by making those cars would exacerbate an already critical greenhouse situation. Converting older vehicles in the national fleet to LPG is the better solution." Dr Sparke reiterated his view that LPG should be used more widely for passenger vehicles and light commercial machines, while CNG should be used for long haul transport instead of diesel.

"Australia has large reserves of LPG and natural gas which are, as yet, under-utilised and we should be taking leadership in the development of gas fuel and vehicle technologies to exploit that supply," said Dr Sparke.

Read more:

LPG on thin ice

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