India’s market for CNG-powered cars and SUVs has expanded with the launch of the Hyundai Exter sub-compact SUV on July 10. The launch comes at a time when retail sales in this segment have reduced by 5 percent in the first half of the calendar year 2023.
As per details available on the government's Vahan portal, cumulative retail sales of CNG passenger vehicles (LMV and petrol-CNG) in the January-June 2023 period are down 5.47 percent when compared to the January-June 2022 figures. The decline in retail sales in the first half of 2023 could be likely due to supply constraints for CNG parts, which is impacting vehicle deliveries to showrooms. This scenario is rather different to the passenger vehicle segment, which registered record sales of 3,18,752 units in the financial year 2023, up 41 percent compared to the previous financial year.
CNG sales 2023: how the top CNG OEMs have fared
There are only four CNG carmakers in India. Maruti Suzuki, with all 12 models (13 with the addition of the brand new Fronx CNG), has a vice-like grip on the market. Hyundai and Tata Motors CNG range consists of three models each, while Toyota offers two CNG models for the Indian market.
Market leader Maruti Suzuki sold 1,15,484 CNG variants of its cars, SUVs and MPVs in the first half of CY2023, accounting for 16.60 percent of its total passenger vehicle sales. These sales figures for the CNG models are, however, down by 3.87 percent compared to the same period last year.
Hyundai Motor India has clocked sales of 22,625 CNG units, which is an 8.65 percent share of its overall passenger vehicle sales, albeit it is also down on year-on-year performance by 11.61 percent. Tata Motors’ performance is in the same vein – the 15,965 units in the first half of 2023 are down by 17 percent compared to January-June 2022. Toyota is the sole OEM to be in positive territory but that’s because it has only recently entered the CNG market with the Glanza and Hyryder.
The marginal 5 percent decline in sales in the first half of 2023 could likely be a temporary phenomenon. The sustained growth of the CNG passenger vehicle sector is also why vehicle manufacturers are gradually expanding their product portfolios to include CNG variants.
CNG power vs shift towards EVs
From a consumer point of view, other than the environment-friendliness of CNG, a CNG-powered vehicle provides considerable savings compared to its petrol- or diesel-engined siblings. What’s also driving the consumer shift to CNG models is the high price of petrol and diesel, for e.g, Rs 111.35/litre and Rs 97.28/litre, in Mumbai on July 13, 2023.
The slashing of CNG prices in early April was a welcome respite to motorists using CNG-powered vehicles and at present, at Rs 79 per kg in Mumbai, CNG is Rs 27.49 cheaper than petrol and Rs 15.27 cheaper than diesel.
CNG vehicle manufacturers also face some level of competition from electric vehicles, which are seeing demand accelerate with the expanding EV charging infrastructure. While the initial cost of an EV is higher than a CNG or petrol/diesel model, the much lower cost of EV ownership, in the long run, remains a very attractive buying proposition. With the central and state governments offering a host of subsidies along with banks and financing institutions plugging into the EV growth story, it is likely the CNG sector's loss could be the EV segment's gain.
Hormazd Sorabjee
Sahil Kukreja
