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Sales of natural gas vehicles evaporate

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Last summer, with gasoline prices in the ionosphere, interest in cars that ran on compressed natural gas (instead of the liquid stuff) surged. When oil prices collapsed ... not so much.

Among the victims of the short-lived natural gas hype are car sales professionals like Alex Tissot, who, as general manager of Colonial Honda in Glendale, ordered up a mess of natural gas-powered Honda Civic GX sedans last summer, only to find them impossible to sell as the price of fuel dropped below the $2.50 mark.

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He and others are victims of a sales problem described in today’s paper: Crashing demand for alternative powertrain vehicles as gas prices decline.

At the height of the gasoline crisis, ordering up 10 natural gas cars seemed like a great idea. After all, when the average price of a gallon of unleaded is $4.11, buying a vehicle that runs on compressed methane at the equivalent per-gallon price of about $2.20 -- and spewing out fewer contaminants while you’re at it -- makes a lot of sense.

Natural gas mania swept the nation. Scarcely 10 days after gas hit that high water mark on July 7, then-Rep. Rahm Emanuel (D-ll) introduced legislation requiring U.S. automakers to make 10% of their fleets run on natural gas within a decade.

As the maker of the only natural-gas-powered passenger car available to consumers, Honda Motor Co. smelled a market opportunity big enough to drive, well, a compact sedan through....

The Japanese automaker had been selling the four-cylinder sedan to the public in California and New York since 2005, after half a dozen years of selling it to commercial fleets. With demand high, the company said it would double production of the Civic GX to 2,000 units and also pledged to make them only in its new Indiana factory.

The car sold like hotcakes, and reports of dealers charging as much as $8,000 over sticker were rampant. Toyota Motor Corp. said it would consider producing a natural-gas-driven Camry and put a natural gas hybrid concept car on display at the L.A. Auto Show. Conspiracy theorists argued that Honda was artificially suppressing supplies of the GX.

With natural gas extremely cheap in some markets, and fast becoming a standard for fleet vehicles, buses and taxis in countries like Argentina, burning methane, rather than octane, seemed like a natural.

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And then the bottom fell out. Oil dropped like a stone and pump prices followed soon behind. By the new year, the price advantage held by natural gas had shrunk to as little as 50 cents in many places. Suddenly, many of the practical problems associated with natural gas as a transportation fuel reared their heads.

First and foremost: a lack of infrastructure. Within 500 miles of Los Angeles, there are only 249 compressed natural gas stations, compared to tens of thousands of gas stations, and drivers of the vehicles learn to map out where they can refuel very carefully.

On top of that, the range of a fully fueled Civic GX is less than 250 miles, compared to close to 400 for the gasoline-powered version. This means more pit stops to the already thin network of fueling stations.

And then there’s the price. Starting at $25,190, the Civic GX costs $1,540 more than the Civic hybrid and a whopping $9,608 more than the regular Civic. It would take a compressed ton (or three) of natural gas to make up that difference.

Although he concedes that ‘when gas prices were high, the GX was a much easier sell,’ Honda spokesman Chris Martin said the company sold out its complete 2008 production run of the vehicle and plans to continue its level of production of the Civic GX in 2009. He said the company doesn’t break out dealership sales of the GX in its monthly sales releases.

Now, six months after he ordered the 10 Civic GX vehicles, Tissot still has seven left. ‘I can’t get rid of them. The last one I sold was in December,’ said Tissot. As for the price, at this point, he said, ‘I can be extremely flexible on them.’

-- Ken Bensinger

Top photo: 2009 Honda Civic GX. Credit: Honda Motor Co.

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