EV troubles, costly fuel fire up sales of CNG cars in India

Demand for passenger cars that run on compressed natural gas (CNG) is picking up in India as skyrocketing petrol and diesel prices and teething troubles in the electric vehicle segment make them a good option for buyers of entry-level cars. Domestic sales of CNG personal passenger vehicles in April more than doubled to 27,000 units from a year earlier, according to data from auto intelligence firm Jato Dynamics.

One of the reasons for the demand is the low operating cost. Shashank Srivastava, senior executive director of the country’s largest carmaker

, said that as long as petrol prices stay in the range of ₹105 and ₹110, the cost of running a CNG vehicle will be at least 40-50% cheaper.

“The running cost of CNG works out to ₹2.1 per km, while petrol works out to ₹5 per km,” Srivastava said.

Maruti Suzuki leads in CNG passenger vehicle sales with its popular models Wagon R, Eeco and Dzire.

Experts said sales of CNG-powered passenger vehicles could have been significantly higher if the supply of semiconductors was not affected.

expects CNG cars to account for up to 20% of its total sales over the next three to five years. The auto major, which launched CNG-powered cars this January, will focus on the hatchback and compact sedan segments for expansion of its CNG model range.

Hyundai Motor India, too, is bullish that CNG-powered cars in the entry-level segment will do well. The Korean car major sees an increased penetration of CNG for its compact sedans like Aura.

Good Bet for Families, Trade

The price and energy density of CNG makes it an attractive proposition for consumers using a car as a family vehicle or tool for trade to grow a business.

Original equipment manufacturers (OEMs) are also keen to grow this segment as it helps them meet their CAFE (corporate average fuel efficiency) obligation norms for average fuel efficiency, said Ravi Bhatia, president, Jato Dynamics. The upcoming CAFE norms require average corporate CO2 emissions to be less than 130 gm/km by the end of 2022.

The government’s push to expand CNG fuel stations in the country has seen their number more than double in the last two years to 3,800 across 250 cities.

Srivastava of Maruti Suzuki said that in another two years, there will be 10,000 CNG stations in 330 cities.

For Maruti Suzuki, the current fiscal started with a significant backlog of bookings. It is currently retailing about 35,000 CNG vehicles a month. It could have sold more if there wasn’t a shortage of chips.

According to experts, new car launches and an expanding network of CNG fuelling stations have boosted sales of CNG-powered cars.

They said cars with factory-fitted CNG kits are safer and give better performance as compared with the retrofitted kits.

Over the last few years, industry sales of CNG vehicles, including commercial and personal vehicles, have increased substantially–rising to 234,000 units last fiscal from 74,000 units five years ago.