Alternatives drive rising portion of car sales

With oil prices on a rise, Maruti Suzuki, Hyundai Motor and General Motors are increasingly looking at alternative fuel variants of vehicles to drive sales.

All three companies have three to five models across the compact car and sedan segments propelled by CNG and LPG fuels. They see, on an average, 10 per cent of sales from the variants. The companies are betting on an increasing procurement of such vehicles with the CNG and LPG dispensing network spreading beyond markets in Delhi, Mumbai and Gujarat.

The country’s largest car manufacturer, Maruti Suzuki India Ltd (MSIL), which introduced CNG-driven variants of its Alto, WagonR and Estilo small cars, the multi-utility Eeco and the SX4 sedan in these areas last August, recently started sales in Andhra Pradesh.

Shashank Srivastav, chief general manager (marketing), MSIL, informed: “The CNG dispensing network currently covers not more than 28 per cent of the overall vehicles’ market in the country. The operating cost of a CNG-propelled car is a third of that of a petrol car. There is demand in the market. If adequate infrastructure is put in place, sales will shoot up substantially.”

The company sees eight to 16 per cent of total sales in Delhi, Mumbai and Gujarat from CNG variants. “In the models where we have introduced CNG, contribution to total volumes is significant. The WagonR and Eeco CNG variants bring in 10 to 13 per cent to the total sales of these brands. We assume a large portion of this sale is incremental, due to CNG options now offered to customers,” said a senior executive at MSIL.

MSIL offers the Maruti Suzuki Omni and WagonR Duo in LPG. While Omni LPG variants contribute eight per cent to total sales for the brand, 18 per cent of WagonR Duo sales come from the LPG variant.

Push factors
“The price differential between CNG and petrol has increased substantially. Diesel cars come at a premium of Rs 85,000-90,000, while premiums for CNG-run vehicles is almost half at about Rs 45,000. Naturally, there is a preference for CNG,” explained Srivastava. CNG costs Rs 29.30 per kg, as compared to Rs 37.75 per litre of diesel and Rs 58.37 per litre of petrol.

Concurred Abdul Majeed, leader, automotive practice, PricewaterhouseCoopers: “There is an increased consciousness today about fuel-efficient and eco-friendly cars. Oil prices will only rise. If infrastructure is put in place, CNG-driven cars would be a viable option.” Though there is no official estimate on the volume of CNG/LPG cars, industry sources indicate eight to 10 per cent of vehicles in the market run on these fuels. A mere two to three per cent of the sales come from factory-fitted CNG/LPG cars. The rest comprise models retro-fitted with CNG/LPG kits.

V G Ramakrishnan, senior director, Frost & Sullivan, added a note of caution, “CNG as a fuel is much cheaper than petrol. Availability is an issue; also, the fuel affects slightly the pickup of vehicles. There is a perception in consumers’ mind about the performance of a CNG/LPG vehicle and may be that is why sales have not picked up as expected.”

Apart from Maruti, Hyundai Motor offers CNG-LPG variants of small car Santro and the entry level sedan, Accent. Said a company spokesperson, “At present, 14-15 per cent of our sales come from these fuel variants. We sell CNG and LPG-driven cars in 14 cities. There is demand in the market, as the performance of these cars is good. Once the dispensing network expands, sales would go up considerably.” General Motors, which has LPG variants of small cars Beat and Spark and CNG-driven Aveo and Optra, registers 10-12 per cent of sales for the models from these variants.