LNG Bus Market Analysis in the First Half of 2013 (1)

www.chinabuses.org: At present, PM 2.5 has been included into the compulsory inspection range of various cities of different provinces. On account of its efficient reduction of harmful gas emission in the tail gas, LNG bus has become the first choice of vehicle to improve air quality, fuel saving and emission reduction. Compared with traditional gas motor vehicle, LNG bus can reduce 97% carbon monoxide emission, 72% hydrocarbon emission, 80% oxynitride emission, 24% carbon dioxide emission, 90% sulfur dioxide, 100% pollutant such as benzene, lead and dust, and over 90% PM 2.5 emission. LNG bus is cleaner and more environmental friendly, in which is gasoline and diesel vehicles far behind. Only needed to be processed a little, emission of LNG bus can be up to Euro V, completely a good news for urban residents trapped by air pollution.

Additionally, methane content of natural gas is over 90%. Prior to liquefaction, it is pre-processed, which made impurity such as water and sulfide eliminated completely. The conditioning of natural gas burning is quite easy and convenient. As for LNG in the same unit mass, its calorific value is higher, quality is steadier and burning is more complete. What’s more, it produces no black smoke and can be up to emission standard. Some expert pointed out that once in processing, emission of burning LNG can exceed Euro V and be up to Euro VI standard. Natural gas is cleaner in nature, for that nitric oxide, hydrocarbon and PM in it is little. Without any catalyst, burning natural gas can be qualified with National III and National IV standard.

Therefore, striving to develop LNG bus has become the consensus of the society.

I. Sales analysis of LNG bus from Jan. to Jun. of 2013

Our domestic gas bus application range is mainly in the provinces and cities of three major gas areas in the middle and the west with early development of gas resources and abundant storage of resources, as well as economically developed regions of developed transport. By June of 2013, LNG markets include mainly Beijing, Shanghai, Chongqing, Tianjin, Sichuan Province, Hainan Province, Harbin, Changchun, Xi’an, Urumchi, Guangzhou, Yinchuan, Jinan, Qingdao, Langfang, Puyang, Nanjing, Yangzhou and Taizhou, which are also the key regions of clean automobile.

1. LNG sales analysis of the first half by month (6m or above)

Monthly Sales Chart of LNG Bus from January to June

From the chart above we can see that growth rate of January is the maximum and March is the minimum. All these positive growths show that despite its small sales volume the development of LNG bus is powerful.

2. LNG sales analysis of the first half by length

Sales Chart of LNG Bus from January to June by Length

From the chart above we can see that sales volume of 11-12m LNG buses is 1,099, taking up nearly a third of the whole sales. What comes next is 11-10m, taking up almost 20% with the sales volume of 679. Then 6-7m ones have a sales volume of 482, taking up nearly 14%。 As a result, 11-12m bus is the majority of LNG sales in the first six months.

3. LNG sales structure analysis of the first half by purposes in the recent 3 years

Transit bus is the absolute subject followed by road buses. Over 83% are transit buses with a slight decreasing trend. And less than 9% are road buses with increasing trend. Group bus always takes up below 5% but with a sign of rising.

Percentage Statistics of LNG Bus in recent Three Years by Purpose

From the chart above we can see that:

A. In the first half of 2013, transit bus is taking up 83.66% market share, road bus is 8.9%, group bus is 4.97% and school bus is 1.67%. Thus, in the structure of LNG sales in the first half of 2013, transit bus is the subject undoubtedly.

B. Transit bus is the absolute subject followed by road buses. Over 83% are transit buses with a slight decreasing trend. And less than 9% are road buses with increasing trend. Group bus always takes up below 5% but with a sign of rising.

Analysis above indicates that in recent years LNG bus is developing fast and has gradually permeated into other market segment such as road, travel and group.

II. Advantage and disadvantage analysis of LNG bus in operation

1. Drive range has become the biggest advantage of LNG bus

Based on CNG, natural gas bus is mainly applied to taxi and transit bus since it is limited by short drive range. However, the most obvious advantage of LNG road bus is its long drive range which makes its application range and scale much wider. In China, gas transit bus takes up almost 20% of its application in the whole transit bus types. Especially in the west and some cities of the South, gas transit bus has become the mainstream. Up to now, LNG Heat also comes into long-distance passenger transport industry. Equipped with two gas cylinders, drive range of LNG bus can be over 1,000km with only 3 to 5 minutes for gas fulfilling. What’s more, key technology of LNG bus in transport, storage and vehicle application has its own breakthrough which can satisfy demanding and requirements of urban passenger transport.

The breakthrough of LNG in the transport of long distance increases its demanding gradually. It is learned that LNG bus in some passenger transport companies takes up 40%, which even can be extended to 80% as their goal. The hot market pushes LNG bus market to be better. In addition, support and promotion by government departments are the continuous power for LNG bus development as well. It is said that the first special fund for energy conservation and emission reduction is of natural gas bus, which greatly improves positivity of passenger transport enterprises to apply natural gas vehicles. Both the economic and social benefits of LNG bus operation have been into effect, motivating passenger transport enterprises in other places to try LNG road buses. Many enterprises including Shandong Qingdao Jiaoyun Co., Ltd, Jining Jiaoyun Co., Ltd and Fujian Putian Transport all start their own LNG bus plans.

2. Lack of gas stations is the major reason blocking LNG bus market development

At present, there are only about 300 LNG gas stations around China. Lack of gas stations and complicate building procedures are what block LNG vehicle development. Although highway traffic mileage of the most regions in China is long, gas stations covering road net is in lack. All of these problems mentioned above is as a consequence of inspection by multiple departments of government and complicated and slow approval building process. At present, to build a gas station needs to get approval by departments of land, planning, safety supervision, construction, fire-fighting and environmental protection, which is definitely a long and complicated process to be completed for at least one year. Investment of labor, material and expense is huge. Even though all related procedures are completed and gas station is completed, it can be of no inspection and supervision because of no related standard. To avoid responsibilities, relative departments in charge would not launch standard or regulations easily and refuse to complete the inspection of the completed gas stations. Once the accident happens, results are hard to take.

Lack of gas stations influences passenger transport or transit companies a lot. Owing to stable routes of long-distance passenger transport and enhanced LNG drive range, the influence is less. Transit needs to gas up depending a lot on gas stations which is difficult for drivers of transit buses.

Based on research, some LNG buses are often out of filled gas when depending on gas tank to gas up. Recently, because gas tank breaks down and could not come into station, LNG buses of the routes could not gas up, which influenced normal operation. Hence, increasing gas stations construction is a significant measure to promote LNG bus development.

III. New-energy bus policy and development trend analysis of LNG bus in the second half of 2013

Representatives of automotive industry of NPC&CPPCC 2013 all advocate that environmental tax reform and promotion of new-energy vehicle should be promoted positively and law should be launched to prevent atmospheric pollution. Development of new-energy vehicle gets to be the focus of all the automotive representatives. Especially in Mar. 11th, automotive representatives of NPC&CPPCC committee opened in Beijing to discuss and give advice on new-energy vehicle development direction and ways to resolve problems. Representatives present at the conference gave much excellent advice on policy trend, battery solution, infrastructure construction, environmental protection, fuel conservation and emission reduction. Wan Gang, director of Ministry of Science and Technology, said that over 27,800 new-energy vehicles were into operation by Dec. of 2012 in which 80% were transit buses. In the following days new-energy buses would be promoted mainly by transit bus as well as application in private use. Nowadays public use of new-energy vehicles exceeds private use which is on account that China implements new-energy vehicle policy based on transit bus priority. Since starting promotion in 2009, this kind of policy is mainly started in transit transport field such as transit bus or taxi. Due to needed infrastructure construction and pile construction for new-energy vehicle development, private use is of slow increase. In the early times, private use is rare. Now it grows to more than 4,400 people using new-energy vehicles for their personal purpose, which would increase rapidly in the future.

Wan Gang stressed that our automobile industry was in the transform period which needs us to know the challenges in foreign new-energy automobile technology development and domestic fog weather. We need to capture chances of technology transform development, enhance cooperative innovation among industry chains, develop commercial mode innovation, implement development strategy of transit priority, positively promote application field and market of new-energy vehicle and accelerate scale promotion of new-energy vehicles. In addition, LNG bus is the new-energy bus of mature technology, low cost and low standard. Therefore, it is the easiest to implement. Thus, as far as I’m concerned, market development trend of LNG bus in the second half of 2013 is as follows:

1. LNG bus may be the main body of increase of gas market in the second half

Since 2009, our new-energy bus has already officially entered the strong promotion period. Mainstream bus enterprises start to try gas bus market and customers of terminal market give much more approval and attention. Additionally, national industry policies good for gas market get launched consecutively. When it came into 2012, promotion and application of gas market accelerated with more obvious market effects enhanced by national beneficial policies. Thus, many bus enterprises set gas bus as their new increase section of extending markets. With slow increase of the whole bus market in China, year-on-year increase of gas bus is of great rise. It contributes 6.54%, 7.78% and 10% market shares respectively in 2010, 2011 and 2012. It is also learned that the number of completed gas stations throughout China is respectively 100, 300 and expected to be over 300 in 2011, 2012 and 2013. Experts within industry generally hold the idea that market contribution of gas bus is expected to be 12% in 2013 and LNG may be the main body of increase of gas market in the second half.

2. Extending trend to road passenger transport of LNG bus market accelerated in the second half

Developing gas bus is not only a market behavior of bus enterprises but also a strategic decision related with national energy safety. Through market trial and technology improvement for recent these year, technology quality of our gas bus is of mature state. Apart from obvious fuel efficiency and about 30% saving fuel cost, its exhaust emission is cleaner. And its power is enhanced, drive range increases by one gas up. Therefore, PM 2.5 environmental requirements and vehicle emission standard in various places are satisfied and it gets closer to operational requirements of customers in different places.

3. Accelerating transition from CNG bus to LNG bus in the second half

Since CNG bus is promoted in China earlier, its inventory volume has come to a certain scale at present and has already been widely applied to urban transit and passenger transport. Its performance and economically advantage have been approved by market. Compared with CNG bus, LNG bus is still of less inventory volume in trail process of its change and advantage in quality and technology. However, in recent these year, LNG bus develops strongly especially in road and travel passenger transport. Its development is of exceeding trend over CNG bus.

The main reason why LNG bus gets more popular by suburb and road passenger transport market is that CNG bus is limited by the size of fuel bottle. And its drive range cannot satisfy passenger operational requirements of road transport. LNG bus can not only satisfy requirements of urban transit but also requirements of middle or short distance road passenger transport. Furthermore, it is convenient for gas up with higher safety. Compared with CNG bus, LNG bus has more advantages over operational cost, manufacturing cost of natural gas engine and vehicle cost performance. It is learned that the most obvious advantage of LNG road bus is its long drive range. If equipped with cylinder of 500 square meters, it can drive 500 to 800km after 3-5 minute gas up. Additionally, present diesel engine is easily transformed to gas engine. Owing to all these convenience and advantages, many transit and road passenger transport enterprises in many places recently start to try LNG bus which will be developed in 2013.

4. Production and marketing dominance will transfer to mainstream automobile manufacturers in the second half of 2013

Developing gas bus has passed over 70 years in China. However, most of mainstream bus enterprises did not pay much attention on technical innovation and development of gas bus for quite a long time. On the contrary, enterprises with no outstanding performance in normal vehicle fields succeeded in the LNG bus market. Thus, they grew to mainstream enterprises of manufacturing and selling LNG bus.

Based on sales rank of gas bus in 2010, 2011 and 2013, top 5 LNG bus enterprises are mainly located in places of rich gas resource such as Chongqing, Sichuan and Xinjiang. Other gas bus manufacturers are also located in districts and cities with good gas tubes. By virtue of unique gas advantage, cost advantage of manufacturing and using natural gas bus is obvious.

China and relative departments make it clearer of strategic positioning of road gas bus future development. Beneficial policies such as Fuel Conservation and New-energy Vehicle Development Plan and other regulations of fuel conservation and emission reduction are on the way to implement for enterprises. Furthermore, market price mechanism of gas price, natural gas supply tube net and gas station construction are all enhanced. To promote using gas buses to road passenger transport enterprises, guidance and policy support are improved. Gas bus transfers to LNG bus from present CNG bus, which is a fuel reform of bus market as well as a new and inevitable market trend of continuous bus market development. We believe that in the following years urban transit and road passenger transport will be of gas bus and LNG bus. Such market trend and development status will be more obvious in 2013.