04.Does it pay for itself?
To encourage the uptake of LPG as an alternative fuel, the Government’s LPG Vehicle Scheme offers rebates for the conversion of a petrol or diesel car to LPG, and for the purchase of a factory-fitted LPG vehicle:
- The scheme will run for eight years.
- It offers $2000 for the conversion of a new or used vehicle, and $1000 towards the purchase price of a factory-fitted LPG car.
- The full grant is available regardless of the actual conversion cost, which depends on, for example, the car model and tank size, and can vary from about $2000 - $4000. You may be able to find a cheaper quote, especially if you install a second-hand LPG unit, which is also covered by the scheme.
- There’s a number of conditions:
- The vehicle must be registered for private use.
- The scheme only applies to passenger and light commercial vehicles of up to 3.5 tonnes.
- The vehicle must be registered in your name and state of residence.
- The vehicle must be privately owned, not financed through a novated lease or a salary sacrifice arrangement.
- You can get one grant every three years.
- The grant applies to conversions or purchases made on or after 14 August 2006. Applications have to be made within 12 months of the invoice date, and can be launched from 1 October 2006.
- You have to nominate a bank account for payment of the grant.
- For more information on the scheme and an application form, go to the AusIndustry website, or call the hotline on 132 846.
- For more information on LPG (for example, to find the nearest installer or station), check the LPG Australia website.
How long does it take?
LPG costs about half as much as unleaded petrol. However, it doesn’t contain as much energy as petrol — you’ll need about 20% more LPG to drive the same distance.
The payback time depends on the number of kilometres you drive each year, your car’s fuel consumption, the cost of the conversion and the price difference between petrol and LPG.
Make sure you assess your situation before you convert to LPG — it may take longer to pay for itself than you want to keep the car for. For example:
- You drive your family car for 20,000 km a year — mainly in city traffic, where it uses about 12.5 L/100 km of petrol. On average, you pay $1.40 a litre for petrol, and 78 cents a litre for LPG. Your petrol costs are $3500 per year. The same distance travelled with LPG costs $2340 (at 15 L/100 km) — a saving of $1160. Say the conversion costs $3000, it will pay for itself after a bit over two years without the government rebate, or in about eight months with the rebate.
- The same calculation for a small car using 8 L/100 km of petrol (and 9.6 L/100 km of LPG), travelling 10,000 km per year and being converted for $1600: the savings are $371 per year, and it’ll take about 4.5 years to recover the conversion costs without the government rebate. However, with the rebate you'll have $400 in your pocket from the start.