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Compressed Natural Gas (CNG) vehicles witnessed an uptick in registrations in May after reporting a dip in April.
A total of only 30,358 CNG vehicles were registered in May compared with 29,376 CNG vehicles in April according to Vahan data.
“After a sequential dip in April by 8 per cent (owing to reduced supply by OEMs during the beginning of the fiscal year) CNG vehicle sales (all vehicle segments included) grew by 10 per cent sequentially in May. Further, OEM production will be adjusted to cater for the rising demand for CNG vehicles on account of the price cut. The improvement in the total cost of operation for a CNG vehicle vs alternative fuel types along with the establishment of more CNG stations would drive CNG sales across segments in the near-term,” said Pushan Sharma, Director- Research, CRISIL Market Intelligence & Analytics.
The cumulative sales of April-May 2023 are up by 16 per cent on year while the CNG penetration achieved in April and May 2023 is similar to the penetration of Q4FY23.
Indian automobile companies are also introducing CNG variants of its vehicle models with Tata Motors introducing the Tata Altroz CNG recently. This comes after prices of CNG were reduced on April 6, after the Cabinet committee approved the new plan for domestic natural gas pricing.
The retail sales of CNG passenger vehicles increased by 40.7 per cent despite the CNG price increases in FY23 as per CareEdge.
“We believe that in the medium term, CNG vehicles will continue to see sustained strong demand growth, notwithstanding the steep price rise witnessed in FY23. Now with the reduction in CNG prices and its volatility under the newly administered price mechanism, the attractiveness of CNG as a fuel has further extended which will boost CNG vehicle sales for FY24,” said Yogesh Shah, Senior Director, CareEdge Ratings.
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