Country’s leading carmaker Maruti Suzuki India said that the shift to CNG (compressed natural gas) models from petrol and diesel variants in the passenger vehicle (PV) segment will only gather pace going forward in view of favourable factors.

The share of CNG models in PV sales has seen a big jump in recent months as car buyers shifted towards the cheaper CNG fuel alternative due to the increased price gap between CNG fuel and petrol/diesel as also a noticeable increase in CNG refilling stations across India.

“As it makes economic sense to consider a CNG model vs diesel or petrol variants, fuel type has become a major factor in the purchase of a vehicle rather than the type of vehicle. Even if the petrol/diesel price were to come down to ₹80/85 per litre level, the running cost for diesel and petrol will still be higher at about ₹4.50-4.60 per km (now at ₹5.10 per km) vs ₹1.60-1.70 per km for CNG. Thus, CNG will continue to make sense in the event of a big drop in fuel prices,” Shashank Srivastava, Senior Executive Director, Marketing and Sales, Maruti Suzuki India Ltd told BusinessLine.

Increase in sales

Maruti, a leading player in the sale of CNG models in the PV segment, has seen the penetration of CNG variants in its sales increase to about 18 per cent in October 2021 quarter as compared to 11 per cent in the year-ago period. The company, which offers CNG variants in eight models out of 15, is aiming for total CNG vehicle sales of about 2.5 lakh units for the current fiscal, up from 1.57 lakh units in FY21, 1.06 lakh units in FY20, 1.05 lakh units in FY19 and 0.75 lakh units in FY18.

“The total number would be higher for FY22 had we not faced the issue of semiconductors. Due to this challenge, the waiting period has shot up to four months as compared to six weeks for petrol vehicles,” he said.

Though the price gap between CNG and petrol/diesel has increased significantly in recent months, the bigger driver of CNG vehicle sales is the improved infrastructure for supplying CNG fuel. Thanks to the continued thrust of the Central government, there are about 4,000 CNG fuel stations across 250 cities, up from 1,400 stations in 150 cities 3-4 years ago.

One of the key reasons for the slower penetration of CNG vehicles in the past was the limited city gas distribution (CGD) network connectivity. However, after the development of the CGD network under rounds 9 and 10, the total number of CNG stations is expected to increase to about 8,500 by fiscal 2025 from 3,101 stations in FY21, said a report of Crisil Research.

Also, an additional 65 geographical areas are to be announced under Round 11 of CGD, thereby improving connectivity further. Presently, only Maruti and Hyundai are aggressively promoting CNG vehicles. The market share of CNG vehicles increased to 6.2 per cent in FY21 from 0.1 per cent in FY16. This fiscal may see a further increase in the share of these vehicles given the current momentum in the segment.

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