Even as electrification catches up in some automotive segments, there has been a significant surge in the sale of CNG (compressed natural gas) vehicles as an alternative to costlier petrol/diesel vehicles in the country.

In 2021, there was almost a four-fold increase in the registration of vehicles powered by CNG. The total number of CNG-only vehicle registration for 2021 stood at 1,63,696 units as compared to 41,572 units in 2020. Also, the total registration of petrol/CNG vehicles grew to 2.36 lakh units from 2.07 lakh units in 2020. Registration of petrol/hybrid vehicles grew to 1.22 lakh units in 2021 from about 84,000 units in 2020, according to official data.

The increased price gap between CNG fuel and petrol/diesel and a good increase in the availability of CNG refilling stations across India have driven buyers’ shift towards CNG vehicles.

“Yes, there is a definite shift towards alternative fuel vehicles. In the case of passenger vehicles, we have seen CNG share in sales cross 8 per cent of overall sales and EVs also seeing some traction more so in the recent months. We are seeing more CNG launches by different manufacturers looking at the current gap in retail prices of petrol and diesel,” said Hemal Thakkar, Director, Crisil Research.

Aggressive promotion

In the PV segment, only Maruti and Hyundai have been aggressively promoting CNG vehicles. Maruti, the top player in the sale of CNG models in the PV segment, has seen a big increase in the sale of CNG variants, which accounted for 18 per cent in its volumes during the September 2021 quarter as compared to 11 per cent in the year-ago period. 

As it makes economic sense to consider a CNG model vs diesel or petrol variants now, many companies are also jumping into the CNG bandwagon. Tata Motors will shortly announce its big plans for a CNG range of variants in its PV portfolio.

In the commercial vehicle space, CNG penetration has been happening steadily in the small commercial vehicle segment. However, the recent months saw bigger penetration in the higher tonnage categories due to favourable economic reasons. More new CNG models are to hit the markets soon.

“Since BS-VI launch we have seen petrol and CNG vehicles breach 20 per cent of sales in the sub-one tonne category of commercial vehicles in recent months. In the case of ICVs, our latest interactions suggest that CNG has reached almost 50 per cent of overall sales in recent months. In the case of buses, EV penetration has seen a good increase on account of STU tenders and CNG penetration has also remained good with diesel losing share,” said Thakkar.

Pure CNG vehicles will only be available in the commercial vehicles segment. Company fitted petrol plus CNG options are available in passenger vehicles as well as small commercial vehicles. 

Petrol cum CNG options give the user some comfort that if the vehicle runs out of CNG then he may still be able to run it on petrol. However, with the increasing penetration of CNG fuel stations, this fear should also abate and we should also see reasonable penetration of only CNG vehicles going forward.

Flex-fuel engines

Meanwhile, the Indian government is now pushing for flex-fuel vehicles for using a high-level blend of ethanol in fuel. Though flex-fuel may have its benefits, it may not be compatible with the present petrol engines and may require some production changes, say industry analysts.

“I believe that it is not going to be easy for the OEMs to come up with flex-fuel engines in such a short time frame. Also, for OMCs (oil marketing companies) it will be difficult to have infrastructure supporting both flex-fuel engines and engines with e5 – e10 ethanol blending. As they also have to make space for EV charging infrastructure. It would be good if there is a long term policy roadmap defined for alternative fuel vehicles including flex-fuel vehicles as this will provide much-required clarity for the development of the ecosystem,” said Thakkar.