Carmakers are betting big on factory-fitted CNG variants amid rising demand

Ravi Bakshi, 41, spent a few weeks trying to decide which car model would best suit him and his family. Finally, in August, the Delhi-based marketing professional decided to go in for a hatchback. It didn’t take long for him to decide on the fuel option. Bakshi dumped plans to get a diesel engine and opted for a compressed natural gas (CNG)-powered vehicle. Not only was the operating cost lower, but carmakers were offering factory-fitted CNG vehicles. So these were safer and used better equipment.

Bakshi is among the large number of people who have been fuelling sales in the factory-fitted CNG vehicle market. Car buyers are realising that the gap between the prices of petrol/diesel and CNG is widening and the diesel BSVI engines are leading to a huge increase in the cost of vehicles.

Though passenger vehicles’ sales fell 18% last year, say industry watchers, CNG car sales increased 7% to over 117,000 units in FY20. The number of CNG vehicles on the roads rose from 22 lakh to 34 lakh in the last 5-7 years. Sales of CNG vehicles are projected to shoot up in double digits in the current financial year on lower running costs and wider availability of the fuel. Car companies are making the most of the trend. CNG variant sales account for 13.5% of Maruti Suzuki’s business and nearly 7% to Hyundai’s sales. Others like Ford and Mahindra are also getting into the CNG line. With the government looking at expanding the network of 2,200 CNG stations to 10,000 in 10 years, this segment is set to see more demand.

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Maruti Suzuki currently offers CNG variants in 7 of its 14 models. The country’s largest car maker expects CNG variants’ sales to grow 36% to 144,000 units in FY21. It plans to make the fuel option available on all small cars. Its South Korean rival Hyundai offers factory-fitted CNG options in 3 of its 10 models. Tarun Garg, director, Hyundai Motor India, says CNG engine sales have been picking up month on month for Santro, Nios and Aura. In CY19, Hyundai sold 11,416 CNG powered models.

It aims to reach 3,000 units a month. Factory-fitted CNG vehicles are increasingly becoming the preferred choice of many as they come with the added advantage of normal warranty and no additional hassles in registration, says Shashank Srivastava, ED, Maruti Suzuki. OEMs have been highlighting the dangers of retrofitment in terms of accident risks and engine damage. Factory-fitted CNG kits come with high-quality, leakproof design that offers peace of mind, says Tarun Garg, director, Hyundai Motor India. The government has to play an active role in regulating the unorganised retrofitment industry, says Ravi Bhatia, president of Jato Dynamics.


The ratio between retrofitted and factory-fitted CNG vehicles was 2:1, says Srivastava of Maruti Suzuki, but it has fallen to 1.2:1. The performance parameters are much better in factory-fitted vehicles, he adds. Although CNG offers lower power and torque, it is the best engine to deal with bumper-to-bumper traffic.

A barrier in the widespread penetration of CNG engines was the poor geographical spread of refilling stations. But the number of CNG outlets and the number of cities where the fuel is available is set to double soon. As many as 3,400 CNG distribution outlets are scheduled to become operational across 373 cities by the end of the year. There were 1,730 CNG stations in 190 cities at the end of 2019. Minister of Petroleum and Natural Gas Dharmendra Pradhan had inaugurated some 50 CNG stations this year across 11 states and Union territories. He had said the use of such sustainable fuel would help the country achieve energy security. The the Modi government intends to make India a gas-based economy as it has several benefits.

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The running cost for CNG cars is Rs 1.60 per km against Rs 3.5-4 a km for diesel and petrol.

The premium paid on the acquisition cost of a CNG vehicle at Rs 50,000-60,000 is lower than the Rs 1,25,000-1,50,000 of diesel vehicles. Globally, the fuel has seen mixed success as an alternative transport fuel. CNG cars are sold in 27 countries. The global share of CNG engines in passenger vehicles is 0.3%, from 0.5% in 2015. The drop, experts say, needs to be seen in the light of the increase in the adoption of electric vehicles.

In India, the share of CNG variants in the commercial vehicle segment has grown from 5% in CY19 to 8% in September 2020. Wide-spread use of CNG cars will also help the country fulfil its climate change commitments under the UN Climate Change Conference agreements to reduce India’s carbon footprint by 2030. It makes sense to give the CNG plan some gas.




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