Compressed natural gas is rapidly becoming the preferred fuel for Indian car buyers, with the sales growth of such passenger vehicles in the first eight months of this year outpacing all other types. Between January and August, CNG vehicle sales jumped by 46 percent year-on-year, while petrol car sales fell by 4.5 percent and diesel pickups saw just a 5 percent increase. The growth in CNG sales even surpassed that of petrol hybrid, diesel hybrid, and electric vehicles. In terms of volume, CNG vehicles now account for about 30 percent of petrol vehicle sales. Currently, one in every three cars produced by India’s largest automaker, Maruti Suzuki India, is a CNG model, with CNG penetration in its overall portfolio reaching 34 percent as of August.
Several factors are fueling this growth, including new model launches, an increase in CNG refueling stations, and innovations like Tata Motors’ twin-cylinder system. Original equipment manufacturers are also focusing on cleaner fuels to comply with corporate average fuel efficiency norms, which aim to limit car manufacturers’ carbon dioxide emissions over a financial year.
“The highest oil consumption and CO2 emissions come from pure petrol and diesel vehicles. All other powertrain technologies — including electric, hybrid, CNG, and biofuel — help reduce oil consumption and CO2 emissions,” explained Rahul Bharti, executive director of corporate affairs at MSIL. “It’s both natural and desirable to minimize the use of pure petrol and diesel engines in favor of these technologies.” He added, “CNG is over 90 percent methane, which means it has four hydrogen atoms for every carbon atom, making it a naturally clean fuel.”
Ravi Bhatia, president and director of Jato Dynamics, also noted a broader shift towards alternative fuels in India’s automotive market, as global electric vehicle growth shows signs of slowing. “Data from Jato Dynamics India shows significant growth in CNG (46 percent), and hybrid vehicle sales (19 percent) compared to electric vehicles (7 percent),” Bhatia said.
He attributed this shift to changing consumer preferences and market conditions. “CNG’s affordability and practicality make it particularly popular in the taxi and small business segments, while hybrids are gaining popularity among those who want a balance of performance and efficiency.”
For the first time, CNG PV sales in India surpassed diesel vehicle sales in the first quarter of this financial year. “In this quarter, several new regions, including Rajasthan, Karnataka, Tamil Nadu, Madhya Pradesh, Kerala, and Bihar, have shown healthy growth in CNG adoption. Customer acceptance of CNG vehicles is rising,” Bharti told Business Standard last month.
In a sign of this growing momentum, Tata Motors launched the Nexon iCNG on Tuesday, starting at Rs 8.99 lakh. Describing it as part of Tata’s multi-powertrain strategy, Vivek Srivatsa, chief commercial officer of Tata Passenger Electric Mobility, said: “The Nexon iCNG, as India’s first turbocharged CNG vehicle, will appeal to customers who are value-conscious and eco-friendly, but also want a quality driving experience.”
Hyundai Motor India, the country’s second-largest carmaker, also launched a dual-cylinder CNG version of its popular Grand i10 NIOS hatchback last month, starting at Rs 7.75 lakh.
CNG options are now available in more mid-range models rather than just entry-level variants, as was the case earlier, reflecting growing demand for personal use. As of now, 25 car models across various OEMs come with CNG engines, up from 20 in June 2023 and just 13 a year earlier.
The primary buyers continue to be commercial taxi and fleet operators, often due to city regulations, as well as small business owners who use cars for trade. Industry insiders note that CNG prices have remained relatively stable compared to petrol.
The rise in CNG vehicle sales is also partly due to improved refueling infrastructure, with the number of stations increasing from 3,180 in June 2021 to 6,959 in June 2024.
One key factor in petrol’s decline relative to CNG, according to industry experts, is the price difference between the two fuels. Petrol currently costs Rs 94.72 per liter in Delhi, while CNG is priced at Rs 75.09 per kilogram.