As concerns over global warming continue to increase, the automotive industry is facing tremendous pressure to reduce vehicle emissions such as nitrous oxide (NOx), carbon dioxide (CO2) and particulate matter (PM) because of the harmful effects of these gases on the environment. At the same time, the prices of conventional fuels such as gasoline and diesel are increasing. Collectively, these two factors drive the development of alternative and more environmentally-friendly fuels such as liquefied petroleum gas (LPG) and compressed natural gas (CNG).

“The global automotive industry is making emission reduction a top priority and this is leading to increased development of LPG/CNG as alternative fuels and associated conversion kits.  With the provision of appropriate infrastructure and strong support from governments and fuel suppliers, LPG/CNG will gain greater acceptance as alternative fuels across the globe.”

Several initiatives and legislative measures implemented by the governments of various countries reflect their commitment to promoting more eco-friendly fuels. The European Union, for instance, is introducing more stringent next-generation emission standards (EURO 5 by 2009) and plans to apply further restrictions on CO2 emissions for new vehicles.

In Asia, India and Pakistan have enforced mandatory conversion to alternative fuels for all public transport in certain local regions. Both these countries as well as Iran are expected to record the highest growth in LPG/CNG sales. Latin American countries are also moving toward large-scale utilization of CNG vehicles with Argentina and Brazil being the largest consumers of CNG kits in the world.
LPG kits will continue to mainly dominate the market in the EU, Russia and Turkey, and also other markets in the rest of the world. India and Iran accounted for 20 per cent of global sales of CNG kits in 2006.

While aftermarket sales of LPG/CNG kits currently hold more than 85 per cent of total global kit sales, original equipment manufacturer (OEM) kit sales will steadily increase to reach more than 27 per cent of the total number of units sold by 2012.

Competition from other alternative fuels, such as ethanol and bio fuels that are just as eco-friendly, could challenge the growth of the LPG and CNG markets. The lack of appropriate infrastructure for the distribution and refuelling of these fuels and low levels of customer awareness about the benefits of alternative fuels are other factors hindering market development.

“It will require the combined efforts of car manufacturers, fuel suppliers and local governments to address these challenges,” says consulting company Frost & Sullivan. “Providing the required infrastructure and raising awareness levels by promoting the advantages of alternative fuels will considerably enhance the growth prospects of LPG and CNG vehicles and of associated conversion equipment.”