'Primary buyers are commercial taxi and fleet operators and small businessmen.'
'CNG prices have been remarkably stable unlike petrol.'
For the first time, sales of compressed natural gas (CNG) passenger vehicles in India have surpassed diesel vehicles during the first quarter of the current financial year.
According to market leader Maruti Suzuki, one in every three cars it sells domestically is a CNG vehicle.
It said 189,699, or 18.49 per cent, of the overall 1.03 million passenger vehicles sold in the first quarter of 2024-25 were CNG vehicles, while 188,868, or 18.41 per cent, were diesel.
In June 2023, the share of CNG in the market stood at 13.63 per cent and that of diesel was 18.34 per cent.
Maruti Suzuki's figures are in the same range as the data collected by Jato Dynamics.
Experts said this shift in customer fuel preference was due to a series of new car launches, increased CNG stations, new design innovations like Tata Motors' twin-cylinder system, and original equipment manufacturers (OEMs) focusing on CNG to meet CAFE norms.
"This quarter, several new regions, including Rajasthan, Karnataka, Tamil Nadu, Madhya Pradesh, Kerala, and Bihar, are showing healthy growth in CNG adoption. Customer acceptance of CNG vehicles is on the rise," said Rahul Bharti, chief investor relations officer of Maruti Suzuki.
Ravi Bhatia, president and director of Jato Dynamics, said there was a pull for CNG cars and OEMs were responding with more choices for CNG buyers.
Hyundai Motor India, for example, launched its popular hatch Grand i10 NIOS with dual-cylinder CNG with a starting price of Rs 7.75 lakh.
At present, there are 24 car models across OEMs that offer CNG engines, up from 20 in June 2023 and 13 in June 2022, according to Jato Dynamics data.
"Primary buyers are commercial taxi and fleet operators (due to regulations in many cities) and small businessmen using cars as a tool for trade. CNG prices have been remarkably stable unlike petrol," he said.
The rise in CNG vehicle sales is attributed to increased penetration, with the number of fueling stations growing to 6,959 in June from 3,180 in June 2021.
Though the average price of CNG in Delhi increased 70 per cent to Rs 75.09 in June from Rs 44.30 per kg in the same month in 2021, the declining global liquified natural gas (LNG) prices and the price difference between CNG and traditional fuels are likely to be advantageous for consumers.
CNG is becoming more lucrative for OEMs, with average retail prices rising from Rs 7.64 lakh in Q1FY23 to Rs 8.92 lakh in Q1FY25, according to Jato Dynamics.
"The reason for weighted prices moving up is that CNG is now becoming available in mid variants as opposed to entry variants in the past. This indicates that more individuals are considering CNG as an option for personal transportation," Bhatia said.
Further, queues at CNG filling stations are a thing of the past, and refilling waiting periods are low, Bhatia said.
"The total cost of ownership for target customers is favourable as well. Better road infrastructure and twin cities development means cheaper operating costs for taxis is important," Bhatia said, adding that Indian OEMs are adopting a multipronged approach in offering fuel choices and not restricting themselves to only petrol and EVs.
Tata Motors leads in CNG innovation with twin-cylinder technology. It also plans a turbo petrol-CNG engine. The Altroz hatch, launched last year, features a twin-cylinder CNG engine.
At the time of the launch, Shailesh Chandra, managing director at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, had highlighted the growing demand of CNG as alternative fuel options.
'However, opting for CNG meant compromising on aspirational features and giving up boot space significantly. In January 2022, we addressed the first compromise by launching the advanced iCNG technology in Tiago and Tigor, offering superior performance and top-end features,' Chandra had said.
For Tata Motors, CNG penetration has increased to 22 per cent in Q1FY25 from 16 per cent in FY24.
In comparison, EV penetration stands at 12 per cent. 'We're quite happy with the way the CNG portfolio is performing,' P B Balaji, group CFO at Tata Motors, said in a post-results media call. 'It's also good from a profitability perspective as well.'
Feature Presentation: Rajesh Alva/Rediff.com
