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Study: Regulations Will Drive LPG/CNG Vehicle Market

August 31, 2010

LONDON - According to a new study, stringent carbon dioxide (CO2) emission norms, government regulations, and ecological standards will be the key drivers for the growth of liquefied petroleum gas/compressed natural gas (LPG/CNG) vehicles in developed countries, particularly in the European Union (EU). 

On the one hand, CNG vehicles are expected to have significant growth in the coming years in Europe. On the other hand, LPG vehicles will continue to be a competitive option due to EU incentives resulting from lobbying by the oil companies. 

New analysis from Frost & Sullivan, Executive Analysis of Global LPG/CNG Vehicles Market, concludes that India, Italy and Russia are the largest markets for LPG-powered cars. Meanwhile, Pakistan, Iran, India and Italy are the largest markets for CNG-powered cars. 

"The Turkish and Polish markets will be significant for LPG growth in the coming years," said Frost & Sullivan Research Analyst Hariher Balasubramanian. "Italy is set to remain the largest market for LPG/CNG car sales followed by Iran and India by 2016." 

Cost savings of an average of 50 percent compared to petrol/diesel vehicles will further drive growth in the global LPG/CNG vehicles market. While India is poised to be the undisputed leader in growth for LPG and CNG car sales, the Iranian market for CNG vehicles has the highest sales of CNG vehicles in the world. These sales are encouraged by strong governmental regulations, the study found. 

"However, a major challenge for this market is insufficient CNG and LPG service stations infrastructure and a poor refueling station network," explained Balasubramanian. "Fuel companies will be the key participants in the LPG/CNG market value chain and their response to reducing GHG emissions will be important." 

International government bodies, original equipment manufacturers (OEMs), suppliers in the market and fuel companies should work together to develop refueling infrastructure, facilitating LPG/CNG vehicle sales, according to the study. 

"There is a lack of understanding of the benefits of LPG/CNG by the global population," said Frost & Sullivan Industry Manager Krishanasami Rajagopalan. "LPG and CNG will greatly help in reducing fleet emissions." 

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