As the future lies with alternative fuel powered vehicles, automakers are charting out aggressive plans to grab a sizeable chunk of this segment. Leading automakers are trying to bring down the cost of factory-fitted CNG-LPG kits to capture market from the unorganised sector players.
Maruti Suzuki India Ltd (MSIL), the market leader with around 50 per cent market share of the passenger vehicle segment, is working on minimising the cost of CNG/LPG kits, and eventually bring down the cost of these variants. M M Singh, managing executive officer of production, MSIL said, "The demand for CNG vehicles is very high in major cities and we are planning to come up with CNG models in a big way. Currently, we import parts of the kit from European countries, while some parts are available in India. We are working on reducing the cost of these kits so as to offer factory-fitted CNG cars at a competitive price in the long run". Singh did not want to elaborate about what could be the possible pricing though.
The company is planning to come up with CNG variants of its popular models including Alto, Wagon R,Estilo, multi-purpose vehicle Eeco and its sedan SX4 soon. The main markets for CNG vehicles include the National Capital Region(NCR), Gujarat and Mumbai.
While it is difficult to guage the exact demand for CNG/LPG variants in these markets, capital based CNG and LPG kit fitter Delhi Auto Spares said that it sells around 200 CNG kits every month and that net size of the CNG kit fitting market in Delhi is around 4000-4500 kits per month. The market size in Ahmedabad is estimated at around 3500 kits per month, according to unorganised sector players.
Ahmedabad based Manan Autolink, a leading dealer of Maruti Suzuki vehicle in the region, said that almost 40 per cent of its customers get a CNG kit fitted from outside as they come cheaper. "We sell around 400 cars per month in Ahmedabad region of which around 150 cars would get fitted with CNG kits. The highest selling car here is the Wagon R, which accounts for nearly 40 per cent of the sales followed by the Alto at 28 per cent", informed Anil Patel, chief managing director of Manan Autolink Ltd. Shashin Shah of Yogi Auto Care, a leading Hyundai dealership in the city confirmed the same saying "Market fitted CNG kits are on an average cheaper by around Rs 20,000 compared to factory fitted ones, so most buyers prefer to go for kits sold in the open market. Around 10-20 per cent of our sales currently come from CNG variats of the Accent and Santro".
According to local kit-fitters,the demand in the three major markets for CNG and LPG powered vehicles including NCR, Ahmedabad and Mumbai is roughly around 12,000 units per month, a potential market that orignial equipment manufacturer s(OEMs) wish to crack.
"With the rising petrol prices, we expect the demand for such vehicles running on alternate cheaper fuel to increase. However it is the network and the availability which will determine demand. We,on our part, keep coming up with alternate fuel models and currently we have Santro, i10 and the Accent available for our customers with this option", said Arvind Saxena, director, marketing and sales, Hyundai Motor India Ltd. Around 14-15 per cent of Accent and Santro sales come from alternative fuel variants. There is a price difference of approximately Rs 33,000 for LPG variants and Rs 57,000 for fitting a CNG kit, Hyundai said. Saxena maintained that "The cost of kits are competitive and affordable. However, if taxes and other costs come down in future, we will pass on the benefit to the consumer as well".
Dual-fuel models roughly contribute around 15-20 per cent of the net sales of models that come with the option, industry insiders said and the alternate fuel market is likely to become stronger in the coming months on the back of their lower operating costs. It is estimated that cost of running petrol vehicle is around Rs 3.5 per kilometer while it is around Rs 2.35 for diesel and around Rs 2.23 on petrol-LPG and Rs 1.31 on petrol-CNG. After factoring in the recent price rise of CNG, it is still around 56 per cent cheaper than petrol and around 27 per cent cheaper than diesel in Delhi region. The Centre decontrolled petrol prices on June 25 resulting in a Rs 3.5 per litre increase in rates in Delhi and raised diesel prices by Rs 2 a litre and has suggested a potential decontrol of diesel prices in the recent future.
General Motors India, that was selling around 800 units of the LPG/CNG Spark per month, managed to sell around 300 units per month in the last couple of months as CNG prices went up, informed P Balendran, director and vice president corporate affairs, GM India. "We were the first to launch the CNG variant of a sedan with the Optra. We have been monitoring the market demand ever since and believe that there is long term demand for these variants. Most OEMs are now looking at this space, and we can ramp up our production of alternate fuel variants depending on demand", he added.