Japan: how to revive the Autogas market
By Makoto Arahata, Overseas Business Manager, Japan LPG Association

The key to future growth in the Japanese Autogas market is the private motorist.

Autogas demand in the country has been falling continuously in recent years, mainly because of dwindling consumption by taxis, which make up the bulk of the market. Total demand for Autogas in Japan peaked at 1.811 million tonnes in 1988 (statistics began in 1972), accounting for about 10.5% of total LPG demand of 17.238 million tonnes. Since then, Autogas demand has declined gradually, reaching 1.307 million tonnes in 2010, or 8.3% of total LPG demand of 16.488 million tonnes (see the chart below).

Taxis make up more than 80% of the total stock of Autogas vehicles in Japan and, because they have relatively high mileage, account for the overwhelming bulk of the Autogas business. We need to change this situation.

Autogas has a big price advantage over gasoline and diesel at the pump because of the lower fuel tax on Autogas. The fuel taxes on Autogas, gasoline and diesel are 9.8, 32.1 and 53.8 yen per litre respectively. This means Autogas is much cheaper at the pump: for example, average prices in January 2012 were 68.1, 145.8 and 127.5 yen/litre respectively in Tokyo. The pump price of Autogas has been consistently less than 60% of the price of gasoline in each of the last 10 years and we are hopeful that this favourable differential will persist.

But how can we boost the Autogas market in Japan? We need to promote switching to Autogas among private motorists. The fleet of private passenger vehicles fuelled by gasoline has been very stable in recent years at just over 16 million, but is showing signs of trending upwards slightly, as shown in the chart below. The total number of vehicles has fallen since the mid-2000s.

For motorists to switch to Autogas, there needs to be a good choice of vehicles on offer. So, what Original Equipment Manufacturer (OEM) Autogas vehicles are currently available in Japan? Dedicated Autogas vehicles (that run only on Autogas) are manufactured by Toyota and Mazda. At present, Toyota makes two Autogas vehicles for use as taxis: the “Crown-Confort” and the “Crown-Sedan”. Toyota also manufactures the wagon type of Autogas vehicles, the mini-bus “Coster” and the light-duty truck “Dina”.

Mazda used to sell an Autogas version of the “Axela” car solely to driving schools, but last year they started selling it to private motorists too.

This is certainly good news for the Autogas market. But we realize all too well that this selection of Autogas models is not enough to satisfy all private motorists. Retrofitting existing gasoline-powered cars, allowing them to run on both fuels, is an obvious way of getting around this problem. But, regrettably, the warranties of retrofitted Autogas vehicles is not as good as those of dedicated models. The latter normally come with a 3-year or 60 000 km basic warranty and a 5-years or 100 000 km warranty for the power train.

It is vital that private motorists are offered a good selection of Autogas vehicles, together with warranties that match those of equivalent gasoline vehicles. Most motorists will not switch to Autogas otherwise.

OEM vehicles are expected to be the most suitable solution to meet the requirements of private motorists, so they will hold the key to Autogas market growth in Japan. To improve the OEM vehicles, it will be important to install the “toroidal” type LPG fuel tank, which can be mounted inside the vehicle in the place of the spare wheel, so as not to lose any space in the boot and to reduce the cost of installing the tank.

For more information about Autogas in Japan, please contact Makoto Arahata by email at: m-arahata@j-lpgas.gr.jp.