THE future viability of liquefied petroleum gas (LPG) as a fleet fuel suffered a double blow this week with news that grants to help fleets buy LPG-powered vehicle have run out with five months of the financial year left and that Ford is on the verge of pulling out of the market for LPG-powered cars.
The Energy Saving Trust (EST) is putting all applications on hold until April 2004. It has an annual £10 million grant to cover the extra cost of conversions of new cars available through the PowerShift programme as well as money to convert older, larger vehicles through CleanUp.
The Department for Transport has told the EST no money will be available for further grants until after April 2004, resulting in all new grant applications being put on a waiting list. Grant uptake during the first six months of 2003/04 has increased by 350%, however, with 1,762 conversions funded under CleanUp and 1,569 under PowerShift.
The announcements come as the industry also awaits indications from the Government about changes to LPG duty, which currently make the fuel about half the price of diesel or petrol. No improvement in incentives are expected.
Tom Fiddell, director-general of the LP Gas Association, welcomed the fact that demand had increased, but admitted he was worried that no more funding would be available and called on the Government for more consistency.
He said: 'It's encouraging that the EST has been so successful in providing PowerShift grants but the industry needs consistency and this 'stop-start' situation which has happened before on funding isn't helpful.
'We don't know yet what will happen after the consultation process has ended, but we hope the industry will be back on track. We are meeting Transport Minister David Jamieson this week and we hope growth will continue next year.'
Ford this week revealed it is on the verge of pulling out of the LPG car market with the under-performing Focus LPG likely to be withdrawn just three months after going on sale. Lack of money available for potential customers to subsidise the LPG conversion could be a contributory factor in Ford's decision.
Fewer than 200 LPG Focuses were sold in September and October and to hit its annual target Ford needs to sell about 170 units a month.
A Ford spokesman said: 'We have to look at the situation rationally and if demand does not rise we would have to seriously question our long-term commitment to LPG. People who want to buy an LPG Focus now will find it difficult to obtain their PowerShift grant covering 60% of the cost of the conversion. P 'We were rolling out a pilot programme for Europe in the UK but demand isn't great at the moment and all the PowerShift grants for the rest of the financial year have been allocated.
'We are watching all this very closely and we haven't made a decision yet, but there would be no point in continuing if customers didn't want it.'
He added that the move would not affect LPG-powered commercial vehicles, where Ford has offered conversions for several years.
Vauxhall, which offers a range of LPG-converted cars, including the Corsa, Astra and Vectra says sales of the Astra, its equivalent to the Focus, are currently running 25% ahead of target at nearly 1,000 units for the year to date.