Firm cuts sales goal on LPG, NGV conversions
Energy Reform Co, a major installer of engines running on liquefied petroleum gas or natural gas for vehicles, cut its sales target this year to Bt800 million from Bt1 billion after the government decided to float LPG and NGV prices next year.
President Surachat Nittiwat said yesterday that fewer cars would convert to LPG or NGV after the government announced that levies to the Oil Fund would be reduced for diesel and 91- and 95-octane petrol, causing their pump prices to fall.
The announcement that LPG and NGV prices will be floated in mid-January will further slow car conversions, he said. The LPG retail price is expected to increase gradually by Bt0.41 per litre per month, or Bt4.90 per year, while NGV will increase by Bt0.50 per kilogram per month, or Bt6 per year.
However, decreasing demand for conversions should only be a temporary problem, because motorists will soon realise that the LPG price, despite increasing to about Bt16 per litre, will still be about half the cost of other fuels, which average about Bt30 per litre. Car owners are also becoming more confident in the safety of converting to LPG.
Overall sales in the first nine months were Bt500 million and Bt300 million below revenue targets for the two types of conversions, he said. Registrations of LPG conversions at the Lands Department from June-August averaged 15,000 cars per month.
The company converted about 5,000 engines per month, or one-third of the market. The company believes that next year, motorists’ confidence in converting to LPG will recover and the overall market should expand 30-50 per cent.
LPG accounted for 90 per cent of Energy Reform’s conversions and NGV conversions for 10 per cent.
The company’s conversion equipment comes from an advanced technology factory in Italy.
This year it will launch a product called Fast-Tech that will be targeted at medium-income to low-end customers. The cost of equipment, installation and warranty will be Bt25,000-Bt30,000.
This product is expected to generate 70-80 per cent of the company's future revenue, with premium conversions that cost in excess of Bt35,000 making up the balance of 20-30 per cent.
The company intends to spend 8-10 per cent of sales revenue on marketing. The message will focus on the quality of its conversion equipment and the quality of service at its 200 installation centres around the country.
Customers will be given 100 per cent of their money back if for whatever reason they are not satisfied with the conversion results.
