Italy is among the worldwide leading countries in terms of alternative vehicles. LPG as well as CNG have already surpassed the critical mark of 5 % of yearly new registrations. Therefore they are a real alternative. These impressive registration numbers are reached despite a still limited model offering from OEMs (ie car manufacturers).
It is worth to take a more detailed look at the segment of very small cars (VW up!,Fiat Panda, etc.). Most alternative car models can be found in this segment and the share of alternatives of 25 % is particularly high in this car segment.
Why is that? During various interviews with car dealers Aerius was able to find out that customers´ inhibition level is lowest within the very small car segment when shopping for an alternative propulsion system. Potential buyers do not have sufficient experience with alternatives so far and therefore are easily influenced by prejudices, which are not valid anymore in case well-engineered OEM solutions. But the opportunity to reduce fuel costs by more than 50 % is very tempting. The potential value at risk in case of a wrong purchase decision is comparably small in this car segment particularly if we consider that CNG (NGVs) and LPG cars trade at significant premiums in the used car market.
Segment A: Fiat Group: 500, Panda; Ford: Ka; Daihatsu: Cuore; GM/Opel: Adam, Spark; Hyundai: i10; Kia: Picanto; Mitsubishi; I; PSA: 107, C1; Renault-Nissan: Twingo, Zoe, Pixo, Leaf; Toyota: Aygo; Suzuki: Alto; VW Group: Up!, Mii, Citigo;
Aerius observes the following three developments in the very small car segment which may be of interest for the car market as a whole:
1. The number of Diesel models on offer is being reduced
Stricter environmental standards like Euro 6 and soon Euro 7 target a reduction of particulate matter, CO2 and NOx emissions. Industry experts estimate that the new filter technologies to fulfill these standards will raise the price of diesel engines by 30 %. Due to the high fine particulate air pollution in large cities more and more governments globally implement incentives to substitute diesel cars with more cleaner alternatives (comment: CNG vehicles, ie NGVs, emit nearly no particulate matter at all). One of these incentives are higher taxes on diesel which lead to an image change. In several countries diesel is not „the cheap“ fuel of choice anymore. Several car manufacturers have already reacted to this trend. In Italy the number of diesel models in the very small car segment has shrunk from 9 to 4 within 5 years.
2. Increase of the number of alternative car models
To reach the ambitous CO2 targets and to avoid financially painful penalties car manufacturers increasingly implement hybrid technology and accelarate the development of alternative propulsion systems (comment: Aerius does not view hybrid as an alternative but as a sensible addition to most types of propulsion systems). According to a study of the German Institute of Transport Research in 2013 the combination of CNG with hybrid technology is particularly advantageous. This was confirmed by Opel and Magna who have used this type of combination in their most recent concept cars. Thanks to high sales numbers of CNG and LPG models Fiat´s new car fleet in 2012 was able to reach an emission level of 117 gram of CO2 per kilometer. (source: European Environment Agency). This was the lowest CO2 fleet level of all car manufacturers. Other large car manufacturers are following this example and have broadened their alternative offer. Volkswagen in particular has increased its number of CNG models to 10 since it introduced the modular production (MQB). There are indications that Volkswagen will introduce even more models into the market.
3. CNG is the dominant alternative in Italy
In the Italian very small car segment there are 4 models of each CNG, LPG and electric on offer. In 2010 and 2011 car manufacturers mainly emphasized on selling LPG cars whereas CNG and electric cars did no play an important role then. In the meantime the CNG and electric are on the fast lane in terms of different models on offer. In terms of total vehicle sales numbers CNG ist he absolute winner these days. Despite the media hype around electric mobility total vehicle sales numbers of electric cars are almost unnoticeable.
CNG on the other side has silently reached a market share of 14 % in the Italian very small car segment. This is impressive and was reached with only 4 different models on offer compared to 16 different models on offer for gasoline. Every additional CNG model on offer increased the market share of CNG. One can also notice the start of a similar development in other European countries already.