I recently came across an interesting article on the state and hopes of the LPG industry in Australia. It serves as a good product focused marketing strategy example.
These last few years they’ve faced a declining market due to the popularity of the hybrids, high tech fuel efficient engines and the resurgence of diesel power.
Michael Carmody, the CEO of LPG Australia, has a mandate to be product centred – he is after all the head of a product focused entity. So in response to a declining market it is no surprise to read he’s staying “on product”. However he is also representing the LPG converters and installers who have been doing it very tough. I think they need some better advice.
As quoted on a recent article on the carsales.com.au network, he states:
“The decline in vehicle conversions started occurring in 2008, which I guess was the heyday of vehicle conversions — and the conversions have been declining since that period, where today the market is doing it extremely tough… in terms of keeping that vehicle conversionindustry a viable industry.”
He goes on to implore the conversion industry to get their marketing hat on. Sounds good, but remember he’s a product guy, so don’t get too excited. It’s only going to be product marketing.
Carmody suggests:
- Reinvention of the fuel’s marketing
- Improving the presentation of the fuel on service station forecourts
- Establishing closer ties with the local manufacturers
- National certification scheme for installers
- Put R&D money into converting hybrids to run on LPG
The last point sounds promising, however as the article and Carmody state, converting Prius’s to LPG isn’t particularly easy, there are a number of issues. He also states Toyota are pursuing all electric motors moving forward, so even if such a kit was made, shelf life would be short. This leaves us with the other points, and a poor, sorry list of answers they are.
Let’s hear him out. Here is his final call to arms to put on the marketing hat and think different:
“The industry has got to make that call; if the industry wants a business-as-usual approach, then that graph will keep heading south,”
Now this great advice. BUT everything he has proposed is business-as-usual, product centric solutions. The call should be, stop and think about what is actually being provided by the conversion industry:
Lower running costs for your car
Then look to opportunities in that space. What about aftermarket hybrid kits? Aftermarket all electric kits? Prius battery rejuvenation/replacement services, electric water pumps, solar roof matts to power ancillaries… Small LPG kits in high tech diesels…
Now we’re talking.
Get the product had off and think about the real benefit that the LPG installers are providing. Then find other avenues to deliver that benefit, LPG or not.
With regards to after-market kits I think technical/mechanical issues would be the big factor there, not to mention weight of the vehicle.
I would be interested to know the breakdown of fuel types used in vehicles today. I suspect that petrol would obviously be the winner by a HUGE margin. Retrofitting current petrol cars to run on gas is a relatively straightforward proposition however converting from Petrol to hybird/all electric may not be a doable thing.
So that leave the question of making petrol engines more efficient/cleaner burning which should have the benefit of making them also cheaper to run! – shameless plug here http://www.sixstroke.com – my old man’s invention of replacement head for 4 stroke engines that is cleaner running, more efficient, produces more power and can be a “bolt on” after-market addition to existing 4 stroke vehicles.
Personally I haven’t seen much advertising at all for the gas conversions in some time, since the government have dropped the rebate amount. Perhaps they should get in contact with my old man and look at testing his engine head on LPG
Hi Tim, I had forgotten about your Dad’s invention. There aren’t enough people in the world like him, so I hope it works out. It’s a nice reminder that not all entrepreneurism revolves around social media!
I recently went on a business trip to Tasmania that involved four taxi’s. Three were Toyota Prius’s. I asked each driver about them, and they said that all cabbies were switching to them. The battery had a 5 yr warranty in taxi use, so they drove them for 5 years, and then sold them off. An equivalent LPG Falcon or Commodore would have required a head rebuild and would been more expensive to run day to day. The case for Prius taxi’s seemed over-whelming. So suddenly all these converters aren’t getting the LPG conversion jobs they received previously. Part of Carmody’s solution is to make the pumps and signage nicer. Like that would turn the industry around. If that was the answer, diesel would have never taken off, as they are surely the grottiest around.
I guess to conclude, the converters should focus on any way to reduce car running costs, be it LPG, diesel, electric, or other aftermarket technology. Staying focused on LPG conversions is ignoring the real reason they exist, which is to make cars cheaper per mile / km.
I tend to agree with your conclusion and “Jus’ makin’ er’ purty ain’t guna fixit” in regards to the LPG sales.
The converters that are shutting up shop seem to have been too specialised, and without doing any form of research, this appears to have been their downfall as they failed to adapt when market conditions changed.
With regards to Diesel – I think they did a very good job of promoting it as a more efficient and cheaper solution to petrol, even though you are paying 20c more per litre than petrol, when petrol is at the low point of its weekly cycle.
Hopefully there is something I can to do assist my father get his invention to market as I don’t see the world weaning itself off fossil fuels any-time or petrol burning cars disappearing from our roads.
I think there is a real opportunity with regards to his invention and the world would be poorer if it doesn’t become widespread, in my somewhat biased opinion!
I have to disagree with a couple of points.
First – the Prius has nothing to do with the drop in LPG conversions. I can’t find the data to prove it (probably have access to it at work) but to my recollection, the Prius has ever made the top 10 in terms of sales in Australia. It is very much a niche model.
Also, on the growing trend towards small cars – there is no doubt the large car (ie Commodore/Falcon) market is in decline, however the move is NOT towards small cars – it’s towards SUV.
There was a very interesting article (that I can try and dig up if people are interested) showing that if you overlay large car + SUV sales from 2012, and compare to the hey day of large car sales, the market share is very similar.
Granted it’s only one data point, but from Goauto on May 2012 sales “AUSTRALIA’S motor industry last month surfed a wave of SUVs and utes to a May sales record of 96,069 vehicles, up 24 per cent on last year.”
Here we go:
http://www.goauto.com.au/mellor/mellor.nsf/story2/E5FB16F6BF723EEBCA257A0E0014925A
“In May, Toyota recorded 247 new registrations for the Prius C.”
At one point, Ford were doing 30% of there volume in LPG Falcon – haven’t seen any recent data on their LPG/petrol split.
Thanks for the comments Paul. The main reason for me referencing Prius was because of the trip to Tassie where three out of four taxies were hybrids. Each driver was adamant that they were the best option for taxi companies. It is a very small sample space so could be wrong for all sorts of reasons, however it did seem credible and matched up with Carmody’s stance in the article. BUT 247 sold in May does not seem high enough to support the anecdotal evidence towards hybrids.
Regarding why people are not buying LPG? Carmody stated :
“There are a whole host of factors behind this [downturn]. As an Australian motoring community, we’re downsizing our cars; you’ve only gotta look at the sales of Holden and Falcon — look at that over the last couple of years… Australians are moving away from the traditional… bigger car. Some are moving off into the smarter SUVs, of which diesel has a very strong dominance in that place. And many are moving to smaller four-cylinder cars, and getting the sort of economy they’re seeking”
So he also supports your reference to SUV’s. I didn’t realise they were getting such a high market share, but on reflection, it’s obvious – they’re everywhere!
Interestingly, some of these SUV’s have worse fuel economy than a Falcon or Commodore (Territory, Mazda CX-7 etc).
With LPG installs I wonder how many were being converted because they were work cars, and how many were primarily “home” cars. Are the tradies and delivery vans are switching to high tech diesels, and no longer requiring LPG conversion?
I’ve seen articles on installing LPG systems in diesel cars and trucks, perhaps this may help the installers to remain viable. See:
http://www.dieselgasaustralia.com.au/ and
http://autospeed.com.au/cms/title_Diesel-LPG-an-Amazing-Breakthrough/A_112610/article.html
Some cool results, but this is still focusing on LPG. Installers should think broader to solve their viability issues.
Also I probably titled the post wrong, perhaps should have been something like ‘Applying Marketing Myopia lessons: LPG Australia’. As really it was just a vehicle to apply recommendations from Levitt’s Marketing Myopia HBR article.