Carmakers propose delaying E85 launch in Thailand

Local automobile industry executives say the government should delay the launch of E85 fuel, a mixture of 85% ethanol with petrol, until it can identify specific alternative fuels to be promoted alongside vehicles that can use them.

It is still too early to introduce E85 given that there are almost no cars available to use the fuel mix, said Suparat Sirisuwangura, the president of the Thai Automotive Industry Association (TAIA).

The commercial launch of E85 would also affect the eco-car project, which is being promoted by the government as a means to make Thailand a regional leader in small, fuel-efficient vehicles, said Mr Suparat during a meeting with Industry Minister Mingkwan Sangsuwan.

The eco-car project was announced last year and local automakers are only beginning to create production lines for the new vehicles, Mr Suparat noted.

Thirty percent of eco-car output would be for domestic sales, and manufacturing is expected to start next year. With E85 vehicles entering the market in October, the association says the result will be confusion for both manufacturers and users.

”Some eco-car investors doubt whether their investment will provide returns as there are too many choices for users,” Mr Suparat said.

The TAIA said that confusing alternative fuel policies would change the structure of Thailand’s competitive automotive industry production and drag on the industry’s ability to battle other regional automotive centres.

The association also suggested that the Industry Ministry specify alternative fuels for each particular vehicle type to provide a clearer direction on energy policy.

”It will help users to understand each fuel’s characteristics better while the manufacturers, both for vehicles and alternative fuels, will be able to more effectively plan their production and marketing to fit market requirements,” Mr Suparat said.

The TAIA proposed that compressed natural gas (CNG) should be used specifically in public transport, buses and taxis because it is comparatively cheap and will not put too much of a burden on commuters’ spending.

It suggested that passenger cars be allowed to use any alternative fuels as car owners have different models of vehicles that make it impractical to specify certain fuels for this sector.

For trucks in the logistics sector, Mr Suparat insisted diesel remains essential.

The development of B100 or 100% biofuel should move forward as well since it can ease the sector’s problems when diesel prices fluctuate with crude price volatility.

To support B100 usage, the government should extend the reduction period in levy collections for the state oil fund and excise tax breaks for diesel.

The sharp fall of one-ton pickup sales recently stemmed from heavy CNG support and diesel price increases.

”Pickups are the main segment that will keep Thailand’s reputation as the Detroit of Asia,” Mr Suparat said. ”Especially in the domestic market, one-tonne trucks are also used mainly in our farm sector so supportive measures to ease the impact of expensive diesel cannot be neglected.”

The TAIA also said the Energy Ministry should consider scrapping liquefied petroleum gas (LPG) subsidies so consumers would be forced to be more efficient in fuel usage, while preventing hazards stemming from the use of substandard LPG equipment.

The government’s plan to cut import duty on vehicles capable of running on E85 gasohol has drawn mixed reactions from industry players.

On the negative side, any move to that effect will be unfair to car makers who don’t have E85-compatible technology.

But on a positive side, it will open the door for cars that can retail at cheaper prices than others, thanks to reduced import (customs) tax.

“Apparently, the government is rushing the E85 programme not to satisfy consumers but ethanol producers instead,” noted an executive whose company had just finalised E20 negotiations with its parent firm.

The reasoning behind this thinking is that there isn’t a single car available commercially for sale in the Thai car market that can run on E85 and the government is trying to “artificially” create products that the market hasn’t really cried out for yet.

The E20 variation was only launched this year, while the original launch date of E85 was 2012.

Last week, the Petroleum Authority of Thailand (PTT) announced that E85 will be available at selected pumps by the end of this month and added that Volvo is preparing to import around 200-300 S40s that have E85-compatible engines.

A Volvo executive told Motoring: “We have prepared some S40s for PTT to conduct tests with E85 fuel.”

“But any suggestion that the cars will be imported [with no custom duty] is totally groundless,” stressed the executive before jovially adding, “If that’s true, we’ll [Volvo] throw a big party in Thailand.”

Why? Because if an S40 is subject to no import duty and only the 25% excise duty granted on cars E85-capable engines displacing less than 2,000cc, its retail price would comfortably fall under B1m, as opposed to some B2.5m with today’s 80% import duty.

Better even is that customers aren’t obliged to use E85 which has poorer mileage than conventional petrol and can enjoy ownership experience of a premium saloon over a similarly priced Toyota Corolla.

The Volvo executive said the S40 has a 1.8-litre Flexfuel engine that can also slot into the V50 estate and C30 three-door hatchback. The S40 saloon was chosen because it is the more popular body style in Thailand; the others could follow.

According to figures from Volvo Cars (Sweden), the E85-friendly S40 achieves 9.6kpl on the average - 30% less economical than the petrol-only counterpart and just 2% cleaner in CO2 emissions.

And if it really matters to potential customers, the data sheet indicates that a similarly powered 2.0-litre diesel is 50% more economical and 15% cleaner than Flexfuel.

“But let’s look at the E85 programme from another perspective whereby it can help the country cut oil imports. The country has got to start somewhere and sometime,” said a proponent of another carmaker.

While Ford and General Motors have several models in the US and Brazil that can run on E85, they’ve no direct bearing on models available here.

The likely candidates to be able to run on E85 before the end of the decade in Thailand are Volvo S40/V50/C30, next year’s all-new Ford Fiesta and Mazda 2 and the next-generation Ford Focus, Mazda 3 and Chevrolet Optra.

Saab has E85-compliant engines for the 9-3 and 9-5. However, the government says any carmaker wishing to import such cars with special rates need to have a plan to assemble them in the country.

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