Future of small cars lies in CNG market and for CAFE compliance: Hyundai COO

It’s no secret that the small car segment has steadily been declining over the past few years. In FY24, small cars or hatchbacks were 27.6 percent of the market. This year, the figure has further dropped to 23.2 percent. However, Tarun Garg, COO of Hyundai Motor India, feels that this segment is still very crucial for first-time car buyers and fleet operators, where sales are primarily driven by the CNG variants.

1. CNG variants make up for about 20 percent of Nios’ sales
2. In the case of the Aura, CNG variants comprise more than 90 percent of sales
3. The company attributes the steep rise in sales to the dual-cylinder tech

“Every year, we feel it is bottoming out, and then every year it reaches a new bottom,” said Garg at the company’s Q3 FY25 press conference. The company, however, is still keen on this segment. “We are using the small car platform not only to get first-time buyers but also for CAFE norms compliance,” added Garg.

Hyundai Grand i10 Nios and Aura CNG sales

“The Grand i10 Nios with CNG is going very strong, and the dual-cylinder layout is helping us get the numbers. Even the Aura and Exter are benefitting that way. We saw the highest-ever CNG contribution of 13.1 percent during the calendar year 2024,” said Garg.

Hyundai says the Nios CNG saw a sales increase from 16 percent in Q1 to 19.5 percent in Q2, reaching 20.3 percent in Q3. The Aura CNG sales also saw a similar trend, rising from 86.5 percent in Q1 to 89.8 percent in Q2 and 92 percent in Q3.

“We are also enhancing our rural presence by actively expanding our network to better serve these markets. The trend is very clear that it's going to go up," Garg said.

In the ongoing financial year, the overall CNG penetration surged from 13.7 percent in Q1 to 25.3 percent in Q2, followed by a further jump to 36.5 percent in Q3.

Hyundai’s dip in small car sales

For Hyundai Motor India, the small car penetration was at 22.9 percent in FY24, but in this financial year –in the period between April-December – it has fallen to 20.2 percent. “I think the thing is that the customers’ purchasing power and aspirations have gone up, and they are not willing to compromise. They want a minimum level of comfort and convenience,” explained Garg.