Focusing on Turkish Autogas Market

Ercüment POLATAygaz – Marketing Director

Sub‐Continent Regional Summit, New Delhi, India15 February, 2012

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Turkey is the 2nd largest autogas market in the world...

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Turkish Autogas Market is;

# 1 in Europe; 27% of Europe

# 2 in the world; 11% of world

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1,0

2,0

3,0

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SouthKorea

Turkey Russia Poland Italy Japan AustraliaAnnu

alSales(milliontons)

2005 2006 2007 2008 2009 2010

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0,50

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1,50

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2,50

3,00

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Ann

ual S

ales

(mill

ion

tons

)

Steady growth since 2003;  6% growth in 2011

LP Gas consumption has exceeded gasoline for the first time in 2009

Sales volume exceeded 2,5 million tons…

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Number of LPG cars reached to 3,2 million by the end of 2011

4 out of 10 passenger cars run on LPG !

Biggest LPG Car Park in the world

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500

1 000

1 500

2 000

2 500

3 000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Num

berofV

ehicles(x100

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Annual Increase in Car Park Total Number of LPG Cars

Turkish LPG Car Park has experienced significant growth...

19%20%

23%26%

29%

33%37%

38%40%

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Aygaz18,5%

Mogaz 4,4%

PO Gaz14,9%

Shellgaz11,2%

Milangaz7,5%

SHV6,8%

Bpgaz 6,0 %

Totalgaz 4,5%Akpetgaz 4,1%

Other 22,1%

Competition is hard due to the presence of international oil companies and renowned Turkish LPG firms.

Price reductions threaten the profitability of firms.

Aygaz still leads the industry.

The market is established but… 

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Promotion Activities Are Prohibited!

Government pushes the distribution firms to lower the pump prices.

To encourage competition on price;

As of February 2011, all sales promotion activities except price deals, loyalty programs and free service offers were prohibited.

Big firms focused on loyalty card and credit card campaigns.

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A new local company broke into the market

Price reduction strategy

Initial investment: $ 500 million

Instead of DODO, COCO

Eliminating the dealer margin, price is cut by 7%.

12% market share in İstanbul within one year

Profitability or market share?

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Autogas is sold in :

• 9.400 filling stations

• 75% of all filling stations

Availability and high service quality all around the countrydiminish autogas’ inferior product perception.

Distribution network widens…  

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Car manufacturers show interest in autogas!

50% of the customers first decide on the car brand, then decide on the engine, so offering LPG option is critical.

First factory-fitted LPG car, Fiat Albea, was launched by Fiat and Aygaz in 2005 .

Nowadays, 12 firms offer factory-approved LPG cars.

Renault and Honda recently announced that LPG-converted models are added to their product ranges.

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Underground parking restriction still exists!

LPG cars converted after 2004 (%70 of the LPG car park) meet the

safety standard ECE R 67, the rest will be satisfying it by 2014 at the

latest.

We carry on lobbying efforts in order to remove this restriction.

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Taxes on fuels deeply affect the growth of car park

Although high tax is a barrier for potential users against owning a car, it also is 

an advantage for LPG distribution firms since fuel economy gets more important. 

AUTOGAS Pump price (€/lt)

TAX (€/lt)

Tax ratio

Turkey 0,99 0,44 45%Lithuania 0,65 0,28 43%United Kingdom 0,86 0,35 40%Poland 0,57 0,22 39%Italy 0,71 0,25 35%Bulgaria 0,67 0,21 31%Germany 0,76 0,22 29%Netherlands 0,79 0,21 27%France 0,73 0,18 25%

GASOLINE TAX (€/lt)

Tax ratio

Turkey 1,14 65%United Kingdom 0,91 59%Netherlands 0,99 59%Germany 0,92 59%France 0,90 57%Italy 0,88 55%Poland 0,61 52%Bulgaria 0,62 49%Lithuania 0,64 49%

DIESEL TAX (€/lt)

Tax ratio

United Kingdom 0,91 57%Turkey 0,84 55%Germany 0,73 52%France 0,71 51%Italy 0,71 49%Bulgaria 0,60 48%Netherlands 0,65 48%Poland 0,52 45%Lithuania 0,48 40%

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We are trying to reveal the psychological barriers in the minds ofpotential consumers through researches.

10% of them are decided not to use an LPG car in any circumstances.

90% have the desire but hesitate to use because of:

The perception of autogas as a more hazardous fuel

Loss in engine performance

Underground parking restriction

Gasoline and diesel car owners: Your potential users!

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Information raising campaign helped a lot!

In 2007, an information raising campaign was conducted by Aygaz The aim was to inform public that autogas is a:

Clean, environment‐friendly Safe High performance fuel

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We managed to change the poor reputation of LPG as an inferior, unsafe and low performance fuel in the minds of LPG car users. 

Customer perception of autogas has been improved...

2,85

3,59

2,47

3,693,93 3,9

3,33

3,924,07 4,15

3,71

4,183,79

4,25

3,573,77

4,4 4,444,25 4,324,47 4,47 4,37 4,46

Autogas is safe Autogas is environment‐friendly

Autogas provides highperformance

I use it without any doubt

Perception Scores of Customers (Out of 5)

May‐05 December‐07 February‐08 July‐09 July‐10 October‐10

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Still Turkish autogas market has a great potential…

Turkish passenger car park: 7,6 million

Passenger cars per 1.000 inhabitants: 104

Turkey has a potential to increase its car ownership rate with its developing 

economy.

Passenger cars per 1.000 inhabitants

Italy* 603

Germany* 551

France* 490

United Kingdom* 463

USA 450

Japan 440

South Korea 220

* Source: European Environment Agency 2010 report

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THANK YOU...

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1999 2011

Autogas2,64 million tons (%71)

Bulk0,1 million tons (%3)

Autogas0,35 million tons (%11)

Bulk0,90 million tons (%26)

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Total3,4 million tons

Total3,72 million tons

Cylinder0,98 million tons (%26) 

Cylinder2,15 million tons (%63)

Market has been transforming from cylinder gas to autogas

Only 9% growth

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As a result…

In order to increase your sales:

Invest on marketing and R&D to differentiate the product Build good relationships with conversion specialists Encourage car manufacturers Inform and influence potential car users Carry on with the lobbying efforts

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Conversion specialists’ network is the perfect channel!

The first contact point for LPG customers 

We have founded  Aygaz Conversion Centers Club.

Aims:

• Being the moderator and delivering their problems to the authorities

• Providing monetary benefits to the members

• Helping them advance their service quality 

675 registered firms (%60 of all) have joined the club!

You have to build reputation through testimonials