Germany's Tax Incentives Encourage More OEM powered LPG Vehicles

Germany has had various incentive programs for alternative transportation fuels in place since 2003, as part of their environmental legislation. The programs included LPG (propane) however due to the limited timeframe of the programs vehicle conversions and infrastructure were slow to develop.

In August of 2006, as part of new energy legislation, the German government extended the tax reductions for LPG transportation fuel until 2018. This has stimulated both the demand for conversions and OEM powered LPG vehicles.

Over 400 additional LPG dispensing stations were installed, bringing the number to over 2,000 locations with LPG refueling. The LPG industry has targeted to have over 6,000 stations in place over the next four years. Motorists can save approximately 40% on fuel costs. Conversions are expected to increase from 30,000 units per year to 50,000 per year with an ultimate target of 1,000,000 vehicles operating on LPG by 2020.

Volkswagen and Fiat introduced OEM propane vehicles in Germany in 2006 and in spring 2007 General Motors introduced the OEM LPG option in a number of its Opel models. It is anticipated that other OEM’s including Ford will follow suit.

Typically, the premium for an OEM LPG vehicle in Germany ranges from 2,000 to 2,500 euros. LPG vehicles are primarily dual fuelled in Germany, significantly extending the range. The German LP Gas Association (www.dvfg.de) along with other LPG associations in Europe publishes and regularly updates a website identifying LPG refueling locations with details (www.autogastanken.de).