Shifting gears on propane vehicle production

May 1, 2002 By    

Because sales of propane-powered OEM models from Ford and General Motors have been so poor, one industry vehicle promotional organization is detouring away from Detroit to push aftermarket conversion kits.

Sales of General Motors' new propane van, which is available in passenger and cargo configurations, have been disappointing.
Sales of General Motors’ new propane van, which is available in passenger and cargo configurations, have been disappointing.

The Propane Promotion Consortium was created by a handful of industry businesses with a stake in bolstering sputtering sales of propane vehicle nationwide. The group’s leaders have since concluded that it makes better economic sense for ProCon to focus on obtaining certification for aftermarket engine add-ons while at the same time expanding the national infrastructure of propane fueling stations.

ProCon’s executive director and lone full-time employee, Tammy Fiebelkorn, has left the organization and there are discussions regarding the organization’s consolidation with the Propane Vehicle Council. The council’s traditional role has been to lobby on propane’s behalf before Congress and among various government agencies. ProCon’s main thrust is to develop and promote commercially viable applications.

“ProCon is set up to put rubber on the road,” says Joseph L. Colaneri, the council’s executive director. “We’re all working together on the same cause, but we’re approaching it from different angles.”

“We came together because the PVC was more focused on legislation and lobbying,” explains Curtis Donaldson, a ProCon founder in 1999 and its past president. “There was a lack of attention toward getting vehicles on the road, so we started working hand-in-glove with the PVC. We all have a common interest in building the market.”

The 13 founding firms included propane marketers and technology providers eager to get rolling on transportation initiatives such as propane-powered vehicles and a nationwide network of propane fueling stations.

Through a grant from the Propane Education and Research Council, ProCon helped fund the research and development of GM’s propane-powered cargo and passenger vans. It also has promoted sales of a GM medium duty propane-powered truck.

The Propane Promotion Consortium wants to expand the propane refueling infrastruc-ture in order to stimulate sales of propane-powered vehicles. The chart shows the current number of LPG fueling sites listed by the U.S. Alternative Fuels Data Center.
The Propane Promotion Consortium wants to expand the propane refueling infrastruc-ture in order to stimulate sales of propane-powered vehicles. The chart shows the current number of LPG fueling sites listed by the U.S. Alternative Fuels Data Center.

“We don’t care if it’s Ford or GM-we just want it on the streets,” says Donaldson.

Thus far, though, sales are deep in the dumper, as the OEM projects have not yet caught the fancy of the public, the automakers or even the propane industry itself.

“We don’t have many propane companies out there stepping up to buy this stuff,” laments William Platz, ProCon’s president who has now taken over Fiebelkorn’s duties as executive director.

“It shows a splintered (propane) industry,” Platz contends. “I don’t think it shows a united front for the propane transportation industry.”

Platz’s family firm, Delta Liquid Energy of Paso Robles, Calif., has purchased a propane-powered van, but the widespread lack of buyers seems to have doomed the OEM segment of this marketplace.

Small potatoes

“The key lesson to be learned here is that the OEMs simply can’t be bothered with this,” says Platz. “The potatoes are just way too small for the OEMs to pick up on this market.”

Ford was able to sell only 300 of its 2002 propane pickups, and sales of the Chevy Express and GMC Savanna vans have been equally flat.

Are the vehicles sitting unsold because the propane infrastructure is lacking, or is the propane infrastructure riding behind because there are not enough propane engines on the road?

Despite its performance advantages over competing alternative fuels and the opportunity for promotion, few propane retailers have been buying LPG vehicles.
Despite its performance advantages over competing alternative fuels and the opportunity for promotion, few propane retailers have been buying LPG vehicles.

“It’s the age-old question of the chicken and the egg,” says Platz.

“We’re allowing a huge potential market for this industry to go by the wayside. We need the support of the industry; we need to buy the products,” Platz warns.

Platz believes natural gas is poised to grab a giant portion of the alternative fuels market if propane fails to act decisively. “The propane industry is going to allow someone else to build a market. Everyone’s waiting for someone else to make the first move.”

One key move may be the shift toward aftermarket conversion kits. Platz is convinced that this concept can go the way of the Ford bedliner. As Ford executives took note that the automotive accessory aftermarket was going gangbusters over sales of drop-in and spray-on bedliners for its trucks, the automaker then included factory-produced bedliners within its lineup of OEM options.

Some of the key beneficiaries were the aftermarket makers of these bedliners who found themselves supplying the OEMs. So it may go with propane vehicles should demand be so inclined, Platz suggests.

Jumping on the bandwagon

“If we build a successful aftermarket business the OEMs will jump on it,” he says. “And I’m not in this to sell aftermarket kits; I’m in this to sell propane.”

He makes a similar comparison to a propane dealer selling a furnace to a homeowner: It’s not necessarily the initial order that boosts the business, it’s the years of fueling that furnace that heats up the bottom line.

Propane and the motor car go back a long time. For example, in the 1950s Milwaukee had a fleet of 300 propane-powered taxis, while the Chicago Transit Authority boasted 500 propane-powered buses.

ProCon’s push will remain concentrated on encouraging propane-powered fleet operations and the required components and fueling systems. Government fleets of all types, plus the specialized vehicles serving airports and other quasi-public entities, are under increasing federal pressure to reduce the levels of engine-produced air pollution.

PERC has recently awarded grants ranging from $135,000 to $300,000 for converting airport vehicles to propane (and constructing fueling stations) in Chicago and Austin, Texas. Alaska Airlines also has a PERC pilot project underway.

In mid-April, the Texas Department of Transportation was pondering the purchase of some 40 to 50 propane-powered GM Express and Savanna vans for rural bus systems, according to Bobby Wood, regional marketing coordinator for the Alternative Fuels Research & Education Division of the Texas Railroad Commission.

The vans, which are specially equipped with facilities for transporting handicapped people, were successfully demonstrated for other government and transit officials in Lubbock, Texas. ProCon had developed the van plan along with AFRED; Clean Fueling Technologies; the Texas Alternative Fuels Council; Quantum Technologies (IMPCO) of Cerritos, Calif.; PERC; GM; Texas A&M University and the U.S. Department of Energy.

Texas is No. 1 in the nation for propane fueling stations with 442 in place, according to the U.S. Alternative Fuels Center. The Texas Department of Transportation has 470 propane or LPG bi-fuel vehicles (and 537 CNG bi-fuel vehicles) in its fleet.

“We need to get the propane vehicles on the road. We’ve got the infrastructure here in Texas – even the president’s ranch has a refueling station,” Wood observed in reference to the propane-powered Ford pickup and related equipment donated to President George W. Bush.)

Pulling the plug

Like others in the propane industry, Wood sees better prospects ahead for ProCon if it concentrates on gaining certification for engine conversion kits with the U.S. Environmental Protection Agency.

“It may be the fastest way to bring new product to the market,” says Wood, citing both the low OEM sales figures and the costs involved in altering Detroit assembly lines for specialized production. “We’re discouraged that we weren’t able to sell as many vans as we wanted, but there is a lot of interest in it.”

Newspaper publishers, plumbing companies and bakeries were among those intrigued with the propane-powered vehicles being demonstrated. The aftermarket conversion kits can make it onto the nation’s roadways quicker than a propane-powered OEM edition of a given model, according to Wood.

“You need two years for a particular product to get it to market,” he says, referring to a propane-powered van Ford produced. “Ford pulled the plug about a year too early. They didn’t get many orders for it, so they dropped it.”

Engine changes being made by Chevy are creating new complications for propane-powered OEM vehicles – situations that can probably be better handled in the aftermarket.

“There are just so many engine families out there,” Wood notes.

Yet he is encouraged by a perceived quickness in getting more conversion kits certified. “The EPA is helping the manufacturers streamline the process, but they still have very stringent guidelines.”

A factory-installed propane conversion kit for a light truck runs about $2,500 over the standard cost of the vehicle, and that is the same price quoted for a typical aftermarket conversion kit, according to the U.S. Alternative Fuels Center.

Technocarb Equipment Ltd. of Abbotsford, B.C., Canada, recently finished its testing toward EPA certification for a conversion kit for GM’s 2001 and 2002 8.1 liter heavy-duty engine for buses and trucks.

“This is the first in a long line of fully EPA-certified LPG and CNG conversion systems that Technocarb is planning to bring to market,” reports John Carter, company president. Aftermarket conversion systems for Ford’s popular Crown Victoria sedan and a heavy-duty pickup are also in the works, he adds.

No fuelin’

A key factor in ProCon’s efforts toward pursuing certification of aftermarket conversion kits will be applying them to fleet operations.

“ProCon’s been trying to test an aftermarket system since its inception,” says Donaldson, who also is president of Clean Fueling Technologies of Georgetown, Texas. He also serves as managing director of CleanFUEL USA – a partnership between UGI (the parent of AmeriGas), Clean Fueling Technologies, Georgia Gas Distributors, Mutual Propane and Delta.

Pumping up the volume of the nation’s propane fueling stations also remains a ProCon goal. Within the next year, CleanFUEL USA plans to build 54 new self-service sites in six metropolitan areas: Atlanta; parts of California; Phoenix; Denver; San Antonio and Chicago.

Propane pumps are ready to go in wherever there are drivers prepared to pull up to them, according to Robin Parsons, general manager of Clean Fueling Technologies.

“We’re able to respond very quickly if the market demand is there,” he reports. “These are cookie-cutter applications; we’re ready to drop in 10 to 15 stations in any given market.”

Propane dealers throughout the country should become more involved in furthering propane’s future in transportation applications by installing fueling stations that resemble gas pumps in appearance, ease-of-use and 24-hour access for credit card purchases, Parsons says.

“There is money to be made by fuel marketers, and they need to step up to the plate,” Parsons points out. “And we can’t have this ‘meter in the mud’ out by the bobtails on the gravel” driveway, he cajoles.

Elsewhere around the globe propane is in the driver’s seat as an appropriate and popular motor fuel. Solid sales margins are driving England’s market as it installs three to four new propane stations each day. China last year added 100 new propane pumps for the public.

“It’s the fastest-growing transportation fuel in the world,” Parson proclaims. “It’s year-round money” for this country’s more winter-focused propane marketers. “Let’s make it happen.”

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