The difference between the running cost of CNG and petrol or diesel powered vehicles is narrowing.
• CNG costlier by 70% in one year, while petrol and diesel prices remain stable
According to industry executives, rising prices of compressed natural gas (CNG) may impact sales of factory-fitted CNG models of passenger and commercial vehicles.
Fuel prices, positioned as cleaner alternatives to diesel and gasoline vehicles, have risen by nearly 70% in the past 12 months. CNG is a popular option, especially for passenger vehicles that cost less than ₹10 lakh, and smaller commercial vehicles.
The preference for CNG vehicles as an alternative fuel option is primarily driven by their low running cost. However, while CNG prices have risen sharply, petrol and diesel prices have largely remained stable or decreased marginally in the same period after the excise duty cut in May. This has reduced the difference between the running cost of CNG and gasoline or diesel powered vehicles, thus reducing the cost advantage of buying a CNG vehicle.
This is leading to potential buyers paying a higher upfront cost for a CNG commercial vehicle and weighing the arbitrage between the compromised boot space in the case of passenger vehicles and the likely expense reserve funds from a less expensive fuel.
According to Maruti Suzuki (India) Ltd., which offers the largest portfolio of CNG models in the country, now the traction for CNG models may decrease. Shashank Srivastava, executive director, Maruti Suzuki, said, “Therefore, there is still a huge gap between cost and relative profit for customers. But if prices go up further, customers will start to look more seriously at compromise in terms of boot space and price. Will do it." ,
Srivastava said that Maruti Suzuki has registered steady growth in month-on-month sales of CNG models, mainly due to a sharp jump in production of CNG kits after an extended period, leading to longer waiting periods, and this Also due to the extended range. model. Maruti Suzuki sells seven CNG car models. However, the hike in gas prices has slowed the company's pace of launching new CNG models, as it has taken a phased approach to four new models to be launched in the next few months.
Hyundai Motor India, which sells two CNG models, the Grand i10 Nios and Aura, said it has introduced discounts apart from marketing and advertising initiatives to ensure sales growth.
However, the difference between CNG and petrol, which earlier used to range from ₹30- ₹40, has now come down to ₹10-15. This has made CNG a less attractive bet but still found attractive due to 30% better mileage. On the other hand, the number of fuel pumps is increasing and compared to four months back when there used to be a waiting period on CNG models, the models are currently accessible off-the-rack," said Tarun Garg, chief, deals and advertising, Hyundai Engine India. .
The reduction in traction is clearly visible in commercial vehicles as well.
" However, over the past three months, the pricing advantage has eroded and the arbitrage is now around 20%. Despite the decline, we still have access to about 30% of CNG. So, the penetration which went above 40% has come down to a little less than 30%," said Girish Wagh, executive director, Tata Motors.
