Propane looks to spend more time on the links

Savvy businessmen know that just as many work deals get done on the golf course as they do in a stuffy office.

And soon propane dealers could be offering clients a new show-and-tell experience with their business pitches on links across the nation.

Market research done for the Propane Education & Research Council (PERC) shows substantial opportunity for selling propane-powered golf cars, utility vehicles and specialized commercial mowers into the golf equipment market. The field covers equipment sales for use in municipal, college, resort as well as golf course applications nationwide.

PERC has contracted with Club Car to develop a new utility vehicle platform for the golf, resort, turf, commercial and industrial markets. Golf course and maintenance crews use utility vehicles in various configurations, including cargo, truck bed, food and beverage, and shuttle. Most run on gasoline.

The $650,000 project is geared to produce a competing propane-fueled version that is expected to reach the market in 2013. The platform hopefully can also be applied to a propane golf car product.

Club Car’s product portfolio includes golf cars, commercial utility vehicles, multi-passenger shuttle vehicles, and rough-terrain and off-road utility vehicles. In 2009 it was the second largest golf car manufacturer with 35 percent domestic market share.

According to data acquired during market research coordinated for PERC by Foley & Lardner, a law firm with a division that specializes in representing the golf and resort industry, utility vehicle sales soared to 269,114 in 2008 after barely topping 100,000 units just 10 years ago. The total fell to 221,295 in 2009, the last year for which data is available. Golf courses, colleges/universities, municipalities, hotels/resorts and parks/recreation are the leading markets for sales in North America.

Steve Wayne, PERC’s chief commercial officer, says the large, virgin market is ideal for propane technologies on several fronts.

Switching from gasoline and diesel vehicles provides an opportunity to cut fuel and maintenance costs, extend vehicle engine life and reduce emissions that spoil the environment. It can also eliminate problems of theft and spillage that are common with other fuels.

“We’re thinking that these markets are going to rebound substantially because people have been putting off purchases due to the economy. They’re overdue to replace some of these old products; that’s one reason we chose this vehicle for our entry point,” Wayne explains.

“You start with utility vehicles that are used in factories and all types of businesses – on college campuses, hospital grounds, parks, hotels. These are everyday vehicles that are used to move equipment and people,” Wayne says. “They are typically gasoline-powered vehicles, and we have a convincing story to tell about the benefits of converting to propane.”

Wayne says Club Car is still honing estimates of fuel consumption for the utility vehicles. He notes that golf cars built on the same platform would typically use 10 gallons a day – more than 2,000 gallons a year.

Research indicates the market overall is ripe for propane vehicle technology because of the potential cost savings at a time when budgets are lean.

There also is intense pressure from environmental groups and local communities for these businesses to be good stewards of natural resources (water, wildlife habitat) and to minimize greenhouse gas emissions and water and ground contamination from the use of pesticides and herbicides.

“We offer an answer to the question: What is your carbon strategy? These vehicles will help them answer that because propane engines can help reduce greenhouse gas, carbon monoxide and particle emission compared to gasoline. It improves the overall environment impact,” Wayne adds.

The Foley & Lardner report says universities and municipalities appear to be the most accessible target markets for the utility vehicle sales initially because of the importance of environmental issues among their stakeholders.

Many universities have set up “sustainability” initiatives that involve overall emissions reductions. Propane’s sustainability benefits should likewise weigh large for municipalities given their public scrutiny and responsiveness to advocacy groups and mandates, the research notes.

Large resorts also are championing sustainability efforts with energy consumption, water and supply chain issues. Although vehicles have not been a high priority among these efforts, propane can contribute to achieving their overall objectives.

The golf car market – especially where electric cars are used – appears much more challenging. Electric models already own 80 percent of the sales market with their “zero emissions” perception. Plus, golf car sales have been flat to declining since 195,100 units were sold in 2000.

The golf course industry overall is in transition. After record expansion in the number of courses, players and rounds played, America’s popular recreation industry has been hammered by the weakened economy since 2007. Course revenues are in a pattern of decline due to falloff in greens fees and golf cars, merchandise and private course membership dues.

Data compiled by the National Golf Foundation (NGF), a Florida-based association that reports on the economy of golf, shows there were 15,890 U.S. golf course facilities (11,628 public) operating as of Jan. 1, 2011. That’s down from a peak of 16,052 facilities in 2005.

Yet a 2009 NGF newsletter reported that despite more than 800 closures of golf courses nationwide between 2000-09, golf course supply actually increased by more than 500 18-hole equivalent courses.

States with the most golf course facilities are Florida, California, New York, Michigan and Texas.

But PERC officials are attracted to the fact that golf courses also offer a huge opportunity to capitalize on the growing market for propane lawn care equipment.

The golf industry uses several types of mowers (fairway, greens, rough and riding front deck) to keep course grounds playable. All major manufacturers offer only gasoline and diesel models.

Among the 11 commercial golf mower manufacturers, four of the five companies with the biggest market share (Toro, John Deere, Ariens and Scag) already have introduced propane models in their commercial rider model offerings.

According to data gathered in the PERC study, unit sales of commercial mowers fell from 16,325 in 2008 to 9,400 in 2009.

“We always look at these on a project-by-project basis, but the prospectus for success for the golf course industry is actually a much bigger picture,” Wayne says.

“With a utility vehicle, golf car and mower, we can have a more global approach to their needs. We can bring a one-fuel answer for all of their needs rather than having them add propane incrementally for each smaller use,” he says. “It’s truly a comprehensive alternative fuel solution.”

Photo courtesy of Club Car