Honda Bets on Natural
Gas Cars
October 27, 2005 — By James Hannah, Associated Press
EAST LIBERTY, Ohio — Selling cars
powered by natural gas to American drivers is no small challenge for
Honda Motor Co. Natural-gas stations are few and far between, and until
recently the vehicles were nearly as expensive to fuel up as their
gasoline-powered counterparts.
Now gasoline prices are up about 60 cents a gallon from a year ago and
motorists can buy a device that allows them to get natural gas fill ups
at home. Honda plans to expand sales of the natural gas Civic GX next
year to major cities around the country.
The automaker, which makes the car in this western Ohio city, hopes to
triple its retail business -- going from about 500 cars this year to
1,500 in 2006.
"The market is coming to us," said Gunnar Lindstrom, head of Honda's
alternative fuels division.
However, many of those who buy natural cars aren't driven by their
pocketbooks. They like the idea of having a cutting-edge car that's less
polluting and doesn't rely on foreign oil for fuel. And Lindstrom said
the car is being marketed as a secondary, commuter car.
Automakers developed natural gas vehicles in hopes that their lower
operating cost, cleaner burning fuel and non-reliance on foreign oil
would create a market. By 2004, there were about 130,000 vehicles
running on natural gas -- most of them buses, government vehicles and
commercial vehicles. By comparison, there were about 230 million
gasoline-powered cars and trucks.
The scarcity of refueling stations kept sales of natural gas vehicles
down, and some automakers abandoned their U.S. production.
Honda, which first sold natural gas vehicles only to fleet operators, is
the only U.S. automaker that makes a natural-gas-only car for individual
motorists. General Motors Corp. offers natural gas trucks but sold fewer
than 1,000 last year.
Honda in April began selling the Civic GX at dealerships in California,
where there are about 135 refueling stations available to the public and
natural gas cars are allowed to use the less-crowded car pool lanes even
with a single occupant. The automaker has sold about 475 of the cars as
of Tuesday.
Then, Toronto-based FuelMaker Corp. began selling refueling machines
that motorists can put in their garages. About 50 have been sold.
Fill ups have been a hurdle in sales of natural gas vehicles, which
don't have the range of gasoline-powered vehicles. The Civic GX can go
up to 220 miles without refueling compared with 350 miles for the
conventional, gasoline-powered Civic. There are about 600 public
natural-gas refueling stations in the United States.
"When we were kids, the ultimate dream was a gas pump at the house,"
said Jeff Church, 49, of San Dimas, Calif., who bought a home refueling
machine a few months ago. "Now, I've got it."
The suitcase-sized machine compresses natural gas from the lines in the
home and pumps it into the car. The process takes up to eight hours and
can be done overnight.
Church, a United Airlines pilot, bought a Civic GX so he could use car
pool lanes and avoid traffic jams. He's assured of getting to the
airport within 50 minutes. With traffic tie-ups, the 42-mile trip can
take two hours.
In spite of rising prices, natural gas still costs less than gasoline on
a national average.
According to the U.S. Department of Energy's quarterly report on fuel
prices released at the end of September, natural gas was 65 cents a
gallon cheaper than gasoline. The price of natural gas is projected to
rise this winter by as much as 50 percent -- which could make it more
expensive than gasoline -- but could drop when demand eases after the
winter heating season.
Automakers have also begun stepping up development of hybrid
gasoline-electric vehicles to give customers more options in fighting
higher gasoline prices. The hybrids have far outsold natural gas
vehicles. For example, demand has grown to the point where Toyota Motor
Corp. plans to raise annual production of its hybrids to 400,000
vehicles next year from 300,000 this year.
The Civic GX natural gas car looks, sounds and runs the same as a
regular Civic. It costs $21,700 -- $4,500 more than the basic,
gasoline-powered Civic.
The higher purchase cost will be largely offset by increased tax credits
and incentives contained in a federal energy bill that goes into law
Jan. 1. The bill will provide a tax credit of $3,600 for the car and
$1,000 for the home refueling machine, which costs about $3,500 plus
$500 to $2,000 to install.
It also gives a $30,000 tax credit to someone who builds a public
refueling station. A highway bill that goes into law Oct. 1 adds a tax
benefit of 37 cents a gallon for those who sell motorists natural gas.
Next year, Honda plans to sell the Civic GX in states and cities that
offer additional financial incentives and allow owners easier access to
car pool lanes.
Colorado, Illinois, Louisiana, Maine, Rhode Island and Utah are among
states that offer tax credits, which range from $1,500 to $4,000. A bill
that would give a $2,000 tax exemption is pending in Massachusetts.
Vacaville, Calif., offers up to $4,500 to anyone who buys a new natural
gas car.
Experts say motorists' fear of getting stranded on a long trip and the
time needed to refuel at home could keep natural gas cars out of many
American garages.
"There are a lot of people trying out alternative-fuel vehicles," said
Mark Bunger, principal analyst for Forrester Automotive, a technology
research firm. Most of them do it, he said, because they hope it helps
reduce pollution and makes the United States a little less dependent on
foreign oil.
Bunger doubts that cars fueled by natural gas are going to appeal to
mainstream consumers soon.
"And I don't think it's ever going to be the dominant fuel source," he
said.
But some motorists are sold.
Mike Chemiczak, 46, of Cleveland, bought a Civic GX and a home refueling
system last month because he's got a natural gas well on his property
and gets his fuel for free.
Chemiczak said the car is great for short trips and perfect for him as
he drives to work and then stops at rental properties he maintains. He
estimates he saves about $600 a month in fuel costs.
"People are very jealous," he said.
Source: Associated Press |