Honda Looks to Dealers to Boost Natural Gas Station Network

Honda Motor Co. (7267), the only automaker selling compressed natural gas-powered cars to U.S. drivers, wants some of its dealers to also install pumps to sell the fuel as its seeks to double sales of CNG vehicles.

Boosting sales of Indiana-built Civic Natural Gas sedans requires more fuel stations, Steve Center, U.S. vice president for environmental business development, said in an interview. Honda is negotiating with regulators in California, the biggest U.S. market for CNG vehicles, seeking to have pumps placed at two or more Honda dealerships this year, he said yesterday.

“If the dealer had a fueling station, it would really reduce some of that concern for the customer,” Center said at Honda’s U.S. headquarters in Torrance, California. “It’s not our place to create infrastructure, but it’s a chicken-and-egg situation and we’re going to have to nurse that egg along.”

Honda’s strategy of marketing autos powered by natural gas, a domestically sourced fuel that’s cheaper than gasoline and emits less tailpipe exhaust, comes as U.S.-based competitors plan their own CNG models. General Motors Co. (GM) and Chrysler Group LLC this week both said they’re readying pickups that will run on the fuel.

The 2012 Civic Natural Gas rolled off the line on October 11, 2011 at the Honda Manufacturing of Indiana, LLC (HMIN). This marked the start of mass production of the all-new 2012 Civic Natural Gas as it moves to increase production of the alternative-fuel Civic to support an expanding network of certified Civic Natural Gas dealers across the U.S. Photograph: Homda News Close

The 2012 Civic Natural Gas rolled off the line on October 11, 2011 at the Honda... Read More

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The 2012 Civic Natural Gas rolled off the line on October 11, 2011 at the Honda Manufacturing of Indiana, LLC (HMIN). This marked the start of mass production of the all-new 2012 Civic Natural Gas as it moves to increase production of the alternative-fuel Civic to support an expanding network of certified Civic Natural Gas dealers across the U.S. Photograph: Homda News

The U.S. yesterday raised its forecast for natural gas output in 2012 by 0.4 percent and lowered its outlook for prices. Marketed gas production will average 67.91 billion cubic feet a day in 2012, up from 67.64 billion estimated in February, the Energy Department said in its monthly Short-Term Energy Outlook, released in Washington.

Unanswered Questions

The equivalent of a gallon of compressed natural gas cost an average of $2.13 in January, compared with $3.37 for regular gasoline, according to the Energy Department.

The International Association for Natural Gas Vehicles says on its website there were 1,000 stations and 112,000 natural gas vehicles in the U.S. as of December 2010.

“We’re adding stations rapidly,” said Richard Kolodziej, president of NGV America, a Washington-based trade group that lobbies for natural gas vehicles. “ If you are in an area where there aren’t any fueling stations, this is a great option,” he said of Honda’s plan.

Currently, 270 U.S. Honda dealers plan to sell the Civic Natural Gas, a revamped version of the Civic GX compact sold since the 1990s. The Tokyo-based carmaker’s initial goal is to sell “4,000 to 5,000” CNG vehicles annually, double the previous rate, Center said. Honda builds the model at its Greensburg, Indiana, plant.

‘Fill in Holes’

Details such as the cost of a CNG station at a dealership, how many vehicles it could serve a day and how many such facilities may be established are still being studied, Center said. Honda can work with dealers to obtain needed permits, apply for public incentives and provide financing, he said.

“Something like this helps fill in holes,” Center said. “We want to select a couple of test cases and walk through it.”

Honda hasn’t determined how many such dealer fuel stations may be opened in California and other states, he said. Center, whose previous assignments at Honda included managing U.S. advertising and Acura sales, said part of his new job includes finding uses for environmentally friendly technologies developed by the company.

The Civic Natural Gas sedan costs $26,155, or $2,100 more than a hybrid version of the compact model. The car was named 2012 Green Car of the Year at the Los Angeles auto show in November.

The car averages 31 miles per gallon equivalent of fuel, and holds the equivalent of 8 gallons of compressed gas. Incentives for owners in California include a permit allowing a driver without passengers to use highway carpool lanes.

Honda’s American depositary receipts rose 1.8 percent to $37.06 at the close in New York.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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