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Natural-gas car proposal could boost Greensburg Honda plant

July 9, 2009
Hoping to spur alternative vehicles, lawmakers want to double the size of tax breaks on cars that run on natural gas.

That could be good news for Indiana, where Honda Motor Corp. produces the natural-gas-powered Civic GX at its Greensburg plant. Right now, Honda is the only automaker selling natural-gas-powered cars to U.S. consumers.

Senators joined Texas oilman T. Boone Pickens yesterday to propose legislation that would increase tax credits for natural gas that were created by a 2005 energy law. About 10 million vehicles globally run on natural gas, but only a small fraction of those are in the United States.

"Natural-gas-vehicle technology is here, and all that's needed is the policies to jump-start the industry to make it flourish," said Sen. Robert Menendez (D-N.J.), who introduced the legislation with Sen. Orrin Hatch (R-Utah). Senate Majority Leader Harry Reid (D-Nev.) also supports the plan.

Pickens has spent the past year pushing his "Pickens Plan," which includes more investment in wind and solar energy, rebuilding of the nation's electrical grid and replacing gasoline with natural gas in cars and trucks. He said the incentives would help reduce the nation's dependence on foreign oil.

The tax credits, which can be used to provide 80 percent of the added cost to buy a natural gas-fueled car instead of a typical vehicle, would increase to $12,500 for passenger cars and light trucks under legislation unveiled yesterday. The tax credits currently stand at $5,000 and are set to expire in 2010.

The bill includes more generous incentives for larger vehicles, typically used in government fleets. It also extends several natural gas tax credits for 10 years and encourages government fleets to add more alternative vehicles.

Honda began selling the natural-gas-powered Civic GX to consumers in 2005 after first offering the vehicle to fleets from 1997. The company said the vehicle costs about half as much to fuel as a similar gasoline-engine car.

“We welcome any decision from the U.S. government that benefits our customers,” Yasuko Matsuura, a spokeswoman for Tokyo-based Honda, told Bloomberg News, but she declined to say whether the company would boost output of the vehicle if the legislation becomes law.

Honda’s natural-gas-powered Civic GX sells at a list price of $25,190 while a similar gasoline-engine Civic lists at $17,055.

The GX costs less to operate than a gasoline-powered Civic, but it averages only about 220 miles per fueling and has only about half as much trunk space, Todd Mittleman, a Honda spokesman, told Bloomberg.

Honda plans to sell between “1,500 and 2,000” of the cars this year, Mittleman said.

Production of the car was moved to Honda’s Greensburg plant this year from East Liberty, Ohio. Greensburg is about 50 miles southeast of Indianapolis, in Decatur County.

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