Tata Motors doubles down on CNG variants as demand surges

The company, which launched the CNG variant of small car Altroz recently, said new launches in the segment, coupled with continued price differential with petrol and increased availability of CNG dispensing stations have been driving demand. Tata Motors Managing director Shailesh Chandra told ET that with a new model in its portfolio, the company expects 10-12% of its sales to come from CNG vehicles this fiscal, up from 6% in FY23.

“Despite gas prices going up, sales of CNG vehicles went up by 50% in the last financial year, overall car sales rose 27% in the same period. There continues to be a substantial price differential between CNG and petrol. That, along with several new launches in the segment, is making customers take a long-term view and opt for CNG variants,” Chandra said.

Tata Motors offers CNG options in Tiago, Tigor and Altroz presently. Given lower running costs, automakers from Maruti Suzuki to Hyundai and Tata Motors have, in fact, been betting on CNG as an affordable option for the masses, especially at the lower end of the market. At present, CNG costs ₹73.59 a kg in Delhi and ₹79 in Mumbai. Petrol retailed at ₹96.72 in Delhi and ₹106.31 in Mumbai Monday.

As many as 34,000-35,000 CNG vehicles are sold in the local market every month, presently.

“The value proposition of CNG cars remains strong. As the network (for dispensing CNG) grows, consumers will feel more confident in owning CNG vehicles. The share of CNG vehicles in overall sales in the industry will grow further,” he said.

Rising Share
CNG accounted for 13% of all passenger vehicles sold in the country in the first two months of the year, up from 3.5% in 2019. Market leader Maruti Suzuki, which offers CNG options in 13 models, said it has seen an uptick in demand for vehicles driven by the fuel.

Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki, said in the first two months of the fiscal year, the company has seen 26% of its sales come in from CNG options.

“We are seeing strong demand for CNG vehicles. We have been working on ramping up production of CNG vehicles due to high demand but there are some constraints in supplies due to inadequate availability of semiconductors,” he said.

Meanwhile, CNG vehicles sales surged two-thirds to 63,058 units last year at Korean auto major Hyundai. The carmaker expects demand to increase further.

Tarun Garg, chief operating officer (sales, marketing, service and product strategy) at Hyundai Motor India, said during an earlier interaction CNG-driven vehicles are a good option to extend mobility at an affordable cost to customers at the entry-level.