Frost: Global Focus on Reducing Vehicle Emissions Boosts Market for LPG/CNG Vehicles, Conversion Kits
June 4, 2007 // Published as a news service by IHS
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As concerns over global warming continue to increase, the automotive industry is facing tremendous pressure to reduce vehicle emissions, such as nitrous oxide (NOx), carbon dioxide (CO2) and particulate matter (PM), because of the harmful effects these gases have on the environment.
At the same time, the price of conventional fuels, including gasoline and diesel, are increasing.
According to Frost & Sullivan, these two factors drive the development of alternative and more environmentally-friendly fuels, such as liquefied petroleum gas (LPG) and compressed natural gas (CNG).
Recent analysis from Frost & Sullivan of the market potential for LPG and CNG vehicles and alternative fuel conversion equipment in the original equipment (OE) and aftermarket found that the number of LPG/CNG kits sold globally was 2.9 million in 2006, with estimates to reach 8.0 million by 2012.
The global automotive industry is making emission reduction a top priority and this is leading to increased development of LPG/CNG as alternative fuels and associated conversion kits, analysts said.
With the provision of appropriate infrastructure and strong support from governments and fuel suppliers, LPG/CNG will gain greater acceptance globally as alternative fuels.
Several initiatives and legislative measures implemented by the governments of various countries reflect their commitment to promoting more eco-friendly fuels. Analysts said the European Union (EU), for instance, is introducing more stringent next-generation emission standards (EURO 5 by 2009) and plans to apply further restrictions on CO2 emissions for new vehicles.
In Asia, analysts said India and Pakistan have enforced mandatory conversion to alternative fuels for all public transport in certain local regions. Both these countries, as well as Iran, are expected to record the highest growth in LPG/CNG sales. Latin American countries are also moving toward large-scale utilization of CNG vehicles, with Argentina and Brazil being the largest consumers of CNG kits in the world.
LPG kits will continue to dominate the market in the EU, Russia and Turkey. India and Iran accounted for 20% of global sales of CNG kits in 2006; analysts said this is likely to increase to more than 42% by 2012.
While aftermarket sales of LPG/CNG kits hold more than 85% of total global kit sales, original equipment manufacturer (OEM) kit sales will steadily increase to reach more than 27% of the total number of units sold by 2012.
Competition from other alternative fuels, such as ethanol and biofuels, that are just as eco-friendly, could challenge the growth of the LPG and CNG markets. Analysts said the lack of appropriate infrastructure for the distribution and refueling of these fuels and low levels of customer awareness about the benefits of alternative fuels are other factors hindering market development.
Analysts said it will require the combined efforts of car manufacturers, fuel suppliers and local governments to address these challenges. Providing the required infrastructure and raising awareness levels by promoting the advantages of alternative fuels will considerably enhance the growth prospects of LPG and CNG vehicles and of associated conversion equipment.
Source: Frost & Sullivan.