Sales of Maruti's CNG variants move in top gear amid spike in fuel prices

Improving network of CNG and increase in number of cities where natural gas is now available have also been fuelling growth, company says

Maruti Suzuki India, which has seen a surge in demand for CNG (compressed natural gas) models amid a persistent increase in diesel and petrol prices over the past one year, is set to close the financial year with record sales of such variants, according to a top executive of the company. 

An improving network of CNG stations and an increase in the number of cities where the natural gas is now available have also been fuelling the sales growth, said Shashank Srivastava, executive director (sales and marketing) at the firm.

The maker of the Alto and WagonR sold 116,700 units of the CNG variants in the first nine months of 2020-21, a year-on-year (YoY) increase of 27 per cent. It expects to end FY21 with 157,000 units, a YoY increase of 43 per cent, the highest in the past five years, he said.  

“A narrowing gap between the prices of diesel and petrol has made CNG the next best option after diesel for those looking for economy,” said Srivastava. In Delhi, as of February 9, a kilogram of CNG cost Rs 46.60, while a litre of petrol and diesel cost Rs 87.30 and Rs 77.48, respectively. Besides, the lower running cost of a car powered by CNG (Rs 2.50/kg) makes it more viable than petrol and diesel (Rs 4 to Rs 5/litre), he said.

Petrol and diesel prices rose to a new high on Tuesday after oil-marketing companies increased the rates by 35  paise a litre after a three-day lull.

A little more than eight in every 10 CNG models sold in the country belong to Maruti. In the absence of diesel vehicles in its portfolio, natural gas-powered variants have emerged as the workhorse for the Japanese carmaker.

Puneet Gupta, director (automotive forecasting) at I.H.S Markit, said volumes of CNG variants in the market would grow at a rapid pace as other manufacturers, including Hyundai, Tata Motors, and Kia, were set to step up their presence in the segment. “In the absence of a diesel model in its line-up, Maruti has found a frugal option in CNG and has been quick in converting diesel buyers into CNG.”

But, CNG variants do come with certain limitations, including a long-term corrosive impact on the engine, and weight and space occupied by the cylinders. “For these reasons, it will be only preferred by those who are ready to compromise on these parameters,” said Gupta.  

The growth of CNG models is also being fuelled by an increasing network of CNG. The Ministry of Petroleum and Natural Gas has been working towards improving the availability of the green fuel. In her Budget speech, Finance Minister Nirmala Sitharaman said the city gas distribution network of providing CNG to automobiles would be expanded to 100 more districts. There were close to 2,543 CNG stations in the country as of December, according to the Petroleum Planning and Analysis Cell. This is expected to increase to 4,496 units by the end of 2021-22.