Future of CNG Car variants in India

1. OLX Cash My Car Future of CNG Car Variants in India Rising prices of petrol and diesel have given way to other fuels like CNG at a large scale. The alternative has emerged as a popular fuel for private car owners and commercial fleet owners. Advantages like low running cost, better price while selling used car & being eco-friendly has led to rapid increase in the demand of the CNG vehicle. Various researches on CNG predicts that the sales of CNG cars and aftermarket CNG kits for passenger cars will grow at a stupendous pace in the next five years. It is believed that if required infrastructure is put in place by the government over the next decade, natural gas vehicles could account for one out of every two vehicles sold in the country by 2030. This in turn can be beneficial for car making companies such as Maruti Suzuki (MSIL) and Hyundai Motor India Limited (HMIL).

2. Recently in its Natural Gas Infrastructure Development Plan government unveiled about setting up of around 10,000 CNG stations over the next 10 years. Besides, the Petroleum and Natural Gas Regulatory Board (PNGRB) plans to extend CNG infrastructure to an additional 124 districts. Nomura Research Institute (NRI) in concern with the natural gas stated in a report, “These steps could also help achieve 50% sales penetration of natural gas vehicles by 2030, which in turn, has the potential to achieve crude oil import savings of Rs 11 lakh crore by 2030.” Nomura’s report also confirms that the natural gas infrastructure development plan has the potential to create 400,000 new jobs. Not only this, it is believed that three-wheelers and light commercial vehicle drivers could see monthly income increase by Rs 5000- 8000 by switching to CNG. Currently, the major players in CNG vehicle market are- Maruti Suzuki and Hyundai Motor India. In fact, Maruti saw CNG car sales rise 50% to more than 55,000 units in the first half of the year 2018 due to raise of the fuel prices. Hyundai too has recorded strong demand for the CNG powered variant of small car Santro. But the future may still be electric for Maruti with a liberal dose of CNG as government has waffled on a plan to kickstart electric vehicle in India. According to RC Bhargava, chairman of Maruti Suzuki, given the current level of battery prices, converting these small cars into electric vehicles would cost more than double the present price. Thus, nobody would buy them. Therefore, affordability is major concern for them. On the other hand a CNG variant costs around rupees 40,000 more than the present value and the customer is happy to buy them. Currently, Maruti sells around 74,000 CNG vehicles a year. Although, the number could be higher if the fuel was more readily available. For instance, in New Delhi there are around a million CNG vehicles but less than 450 refilling stations. For better demand of CNG vehicles, Maruti Suzuki is now in conversation with the government and oil companies to widen the CNG network.

3. But many analysts are unconvinced to increase the CNG network as they believe the push for CNG as a short-term investment. Deepesh Rathore, director at automotive advisory firm Emerging Markets Automotive Advisors said, “CNG is a messy technology and delivers nothing more than a stop-gap arrangement considering it is a fossil fuel. …The future is Electric Vehicle and the sooner we build a consensus around it, the better it would be for auto companies and the government.” Moreover, Japan’s Suzuki Motor Corporation, is giving electric cars a serious shot. In fact, Suzuki is already in partnership with rival Toyota to develop an India-specific Electric Vehicle. It is difficult to comment on the future demand of CNG vehicles as per an analysis done by OLX Cash My Car . But it can be seen that the market will be flourishing with the new variant soon that may hamper the demand for CNG vehicles.