Market Insight: Ford’s tough EcoLPi route

AS EXCELLENT as Ford’s new EcoLPi Falcon might be, the LPG-powered model was never going to resurrect struggling sales of the Australian-built large car overnight.

But the Blue Oval must be worried about the extremely low numbers in the factory-fit LPG market after its substantial investment in the new system and expectations that at the very least EcoLPi models would outsell the old E-Gas models, which accounted for 25 per cent of total Falcon sales.

The latest VFACTS figures show that EcoLPi could have accounted for no more than 8.5 per cent of Falcon sedan sales in November, when the Blue Oval managed only 1483 sales overall for the large sedan.

And last week an excise on LPG fuel was also introduced in Australia for the first time, which will result in higher gas prices and less benefit in running a gas-powered vehicle.

Ford management has not revealed exact sales forecasts for EcoLPi or total Falcon sales, and has denied information from GoAuto sources that just one in 10 inline sixes built in Geelong would be LPG versions.

However, at the launch of the new model there was much talk of pent-up demand from customers after the previous E-Gas model’s discontinuation in September 2010 and the first deliveries of EcoLPi in August, and that it would at least provide the basis for growth in Falcon sales.

Left: Ford Australia president and CEO Bob Graziano.

The aim was for EcoLPi to boost new Falcon registrations in the second half of 2011, with the four-cylinder turbo-petrol EcoBoost Falcon – which GoAuto sampled last week ahead of its launch early next year – providing further stimulus.

Ford Australia president and CEO Bob Graziano said last week that EcoLPi was helping recover sales volume the company lost when it stopped building E-Gas Falcons due to tougher emissions regulations.

He still would not put a figure on current EcoLPi sales, but said the company was pleased with its performance in November and optimistic of a better December result and a strong run during 2012.

This would be welcome news for a company that has suffered a long-term fall in Falcon sales and which is believed to be about to make – or has already made – a decision about the large car’s future in Australia.

Ford has confirmed the next-generation model will shift to a global platform, with the Falcon widely expected to be heavily based on the North American-developed front-wheel-drive Taurus.

With no clear word on the future of Falcon, or derivatives from the same platform (Falcon ute and Territory SUV, and with powertrains such as LPG), Ford Australia’s long-term role as a motor vehicle manufacturer also remains uncertain.

Putting perspective to Falcon’s plight – and the influence of the EcoLPi model’s introduction – are industry statistics that show a substantial decline in sales of the sedan since July compared to the corresponding months in 2010, with falls of between 21.6 and 37.4 per cent each month to the end of November.

The raw numbers during this period range from as low as 1483 units and only as high as 1835.

Falcon ute sales have similarly made little impression, with sales falls of between 18.0 and 32.3 per cent across July to September (units between 454 and 752), although October’s drop was less dramatic at 6.0 per cent (637). Last month, the ute fell 15.2 per cent (680) compared to November 2010.

These are extremely low numbers for the once-mighty Falcon, which to the end of November finds itself down 37.0 per cent (sedan) and 25.6 per cent (ute) compared to the same period last year, falling even deeper in 2011 after a sustained downturn in recent years.

Indeed, Falcon sales have fallen every year since 2003, from more than 73,000 sedan and 20,000 ute sales eight years ago to fewer than 30,000 last year for the sedan and fewer than 10,000 for the ute.

This year, with a month of trading left, Ford is staring at fewer than 20,000 Falcon sedan sales and only 7000 new registrations for the Falcon ute.

With Holden’s dual-fuel LPG Commodore sedan and utility registered as petrol models, most of the official industry-wide LPG sales figures can be attributed to Falcon.

Using this as a basis, the figures show significant downturns this year compounding the problem of a sustained fall in recent years, with only a flicker of light since EcoLPi’s introduction.

To the end of November, LPG private passenger car sales are down 74.4 per cent, while non-private LPG passenger car sales have fallen 69.2 per cent.

In the light commercial vehicle segment, which is traditionally the key area for LPG, the latest VFACTS figures show LPG down 25.4 per cent this year among private buyers and 54.7 per cent for non-private.

Break that down month-by-month since July, and assuming Ford accounts for every LPG sale recorded across the industry, EcoLPi is still well below the 25 per cent mark it needs to at least bring it back to where it was with the previous E-Gas model.

There were just three private LPG passenger car sales across Australia in July, six in August, 18 in September, 22 in October and then a drop to five in November.

LCVs? Try six in July, just one in August, 10 in September, eight in October and seven in November.

There was a small upward trend for a month or two, but more striking is how little interest private buyers have in factory-fit LPG and, by extension, Ford’s EcoLPi.

Of course, business buyers are vital, and there are signs of improvement with LPG sales in recent months, albeit with relatively low numbers.

After LPG sales in August proved to be even lower than July for non-private passenger cars and LCVs (59 and 27 units respectively), a rise to 235 LPG cars and 103 LCVs was recorded in September and similar numbers in October (223/103).

Ford has been hoping that fleet contracts up for renewal will provide a boost for EcoLPi, but November figures released this week show only 121 LPG non-private passenger car and 89 non-private LCV sales across the industry.

In a best-case scenario, assuming all these figures belong to Ford, LPG’s percentage of Falcon sedan sales last month was 8.5 per cent, and 14.1 per cent for the ute. Is this the “pent-up demand” Ford had anticipated? Clearly, the company needs to achieve a better return to make its investment worthwhile and bring positive growth for Falcon sales overall – something that could still occur with the switch to the better-value FG Falcon MkII series from early next year.

However, Ford, as well as the broader automotive and LPG industry, must also contend with an excise on LPG fuel introduced from December 1 – increasing in annual instalments until mid-decade – and the phasing out of federal LPG installation rebates.

In 2008, Australia recorded more than 13,300 official factory-fit LPG sales, only to fall to around 10,000 in 2009 and then to slump 24 per cent last year to less than 8000.

This year, as large-car sales continue to struggle, so too does LPG. Just 2852 factory-fit LPG cars have been sold in 11 months.

Holden will launch its own new dedicated LPG system early in 2012 that the company expects will bolster sales of its large passenger cars and utility.

If included on the official data sheets, LPG’s overall figures will also improve.

Yet it remains to be seen whether in real terms, and to any great extent, factory-fit LPG sales will recover, just as question marks hover over the future of the large cars in which the alternative fuel makes such a valuable contribution.