Nowadays, a silent evolution is being celebrated in Turkey, the country with the largest LP Gas car park in the world. Some 37% of passenger cars running on LP Gas and therefore the LP Gas consumption has exceeded gasoline consumption figures from 2009. However, this success story was not easily attained.  

The Turkish autogas market came into being in 1997 in a conjuncture where LP Gas was heavily subsidized by the government for home usage.  Standards regarding the autogas market did not exist at this time.  Some entrepreneurs, examining other autogas countries, came up with the idea to embark on the autogas business.

With an economical advantage of 70%, LP Gas found a suitable growth environment. This was an excessive and uncontrolled growth from zero to approximately 1.5 million tons within 3 years. This situation forced the Turkish government to lower demand by increasing LP Gas pricing. Simultaneously, studies on the standards had been started. After the initiation of required standards and laws in 2003, the autogas market had begun its continuous upward trend. By the end of 2009, the market had reached a volume of 2.3 million of tons and a parc of 2.6 million LP Gas cars. This rising demand continues in 2010 and the market is expected to be 2.5 million tons by the end of the year.

This brief history of theTurkish autogas market may seem to be a simple story. However, the fact is that there are many conditions that were satisfied in order to form such a sustainable market.

Formation of a market is a kind of a chicken and egg problem. The customer looks for a suitable price, a good product and a widespread filling station network in order to convert his/her car to run on LP Gas. On the other side, the LP Gas companies need enough customers to invest in the sector. This paradox is a hard task to overcome but thanks to both sides, it was easily passed over in Turkey .

To form a sustainable autogas market, several conditions need to exist: a good price, a good product, a widespread filling station network, a reliable and wide conversion infrastructure, OEM support, public awareness of autogas advantages and legislation of supportive laws. Although all of them are important, some are vital and some are complementary.

Price is the most critical motive to stimulate demand for the conversion process. The customers should get a net economic advantage of at least 20-25% in order to run their cars on LP Gas. In Turkey, after the initiation of the standards, the government regulated the LP Gas-gasoline price index so well that it fluctuated in a range of 50-60%, providing a net economic advantage of 20-35%. The impact of price on demand can be seen in Figure 1 more vividly, as the market growth rate changed dramatically by the fluctuations of the index.

Figure.1 – Autogas-Gasoline Price Index and Autogas Sales Relationship

With the price in hand, the second condition to be satisfied is the product quality. It’s very hard to persuade a consumer to use an inferior product although it provides a significant economic advantage. During the emergence of the market, the product had some performance based problems especially occurring in winter conditions. However, especially with the endeavor of Aygaz, LP Gas provides the same engine performance compared with gasoline as well as a lower cost, and lower emission rates. The first step was the launch of the first LP Gas product complying with EN 589 standards in 2001. The other companies followed and the product quality had been raised significantly.

After three years, Aygaz had launched the first product special to winter conditions by increasing the propane percentage of the product. By this way, the ignition problems in cold days had been overcome. Last but not the least, in 2009, Aygaz introduced the first product with additives which brought about higher engine performance, consumption efficiency and improvement in emission rates. As a result of this progress, consumers’ perception of autogas as a low performance fuel had diminished.

The third condition (also one of the 4 P’s in marketing strategies as place) is to provide enough filling stations to the consumers. With the intense demand of consumers, the LP Gas companies did not hesitate to invest in this sector. Today, there are more than 8,500 stations spread all over the country and consumers have no difficulty in finding a station nearby.

By supplying these three conditions, an autogas market can emerge in any country but in order to have a sustainable growth, you should provide even more advantages, such as a good conversion infrastructure. As mentioned above, in the early years of the industry, the conversions were performed without sticking to any standards. This situation scared the newcomers and the demand had fallen. After building up a conversion network of 1,000 licensed conversion shops, the market had begun to grow consistently.

On top of this, taking the support of the car manufacturing firms can be seen as shifting into second gear.  An autogas market is mostly developed by the early conversions of the old cars. It happened in that way also in Turkey. After the advantages of the product were perceived by the majority of the society, owners of the newer cars tended to convert their cars respectively. At that time, the support of the OEM played a critical role in the development of the market. 12 firms, with a total market share of approximately 40%, placed LP Gas cars in their product ranges. This movement prevented the market from reaching saturation. By this means, the market could grow not only by converting old cars but also welcoming the new car owners.

Satisfying these conditions, ensures success. However, there is still room to move. You have to strive for adoption of supportive laws or incentives. In Turkey, autogas was never subsidized by the government. On the contrary, its growth rate was throttled down with the underground parking restriction of LP Gas cars. Nowadays, it is the only barrier in some of the potential users’ minds. The LP Gas distribution companies continue on their lobbying efforts and hope to find a proper solution.
After ensuring all of these conditions, you can conduct market research and enjoy the improvement in the public awareness of autogas. As Aygaz did in 2007, you may advertise the advantages of autogas to make it more popular in the mindset of the consumers. Figure.2, below demonstrates the change in the perception scores, especially after conducting the information raising campaign in 2007.

Figure.2 – The change in the perception scores of customers

To sum up, building up an autogas market thoroughly necessitates several conditions to be fulfilled. Providing a good product with a good price through a good station network stimulates the demand to a certain extent. In order to make the growth sustainable, a good conversion infrastructure and support of the car manufacturing firms are strictly needed. On top of these, if the government favors the market by giving incentives or making supportive laws and the public awareness of autogas is raised by campaigns, there is nothing that can stop the progress of the market. Turkey had achieved this despite the lack of any incentives or supporting laws. We hope that new success stories are not far away for other countries.

For the full article incl graphs, go to:  http://www.worldlpgas.com/gain/autogas-is-best/turkey-largest-lp-gas-parc-in-the-world/