In SUV race, CNG raring to close gap with diesel

New Delhi: Once the fuel of choice for small cars, CNG is increasingly emerging as a serious alternative for cost-conscious small utility vehicle (SUV) buyers who traditionally defaulted to diesel.

As much as 15.3% of SUVs registered with transport authorities in the first half of the current financial year were powered by CNG, according to data from automotive consultancy firm Jato Dynamics.

That was more than half of diesel (28%) and one-and-a-half times battery-electric vehicles, i.e. BEVs (9.9%). The share of CNG was 13.2% last fiscal and just 0.2% less than five years ago in fiscal 2023, when Maruti Suzuki launched India's first SUV with a factory-fitted CNG kit, the Brezza, followed by the Grand Vitara S-CNG.

Diesel, which remains the preferred fuel option for buyers of large SUVs, accounted for a 38.9% share in SUV sales in FY22. Combined with petrol, the share fell to 73.1% in the six months through this September from 98.6%.

New Delhi, Pune, Ahmedabad, Mumbai and Surat are the top markets for CNG SUVs, senior industry executives told ET. This growth in the first half of this fiscal year came despite the model availability remaining unchanged from last year at nine, indicating the increasing popularity of the cheaper and less-polluting fuel among SUV buyers, they said.

"India's SUV boom is no longer just about body-style preference. It is increasingly about making SUV ownership economically viable for a broader customer base," said Jato Dynamics president Ravi Bhatia.

Growing Acceptance

"CNG offers cost-conscious buyers a way to access their preferred body style without traditional SUV running costs," he added.

At Hyundai Motor India, SUVs are consistently contributing more than one-third to total sales of CNG-powered vehicles, managing director Tarun Garg said, highlighting this as an example of growing acceptance of alternative fuels beyond traditional hatchback segments.

The company, which offers the Exter micro-SUV with factory-fitted CNG kit from 2023, is readying to add a second model, the Bayon, to the CNG line-up in January.

Maruti Suzuki, which has the largest portfolio of CNG models on offer, said it saw sales of CNG vehicles grow 44% in the first half of the fiscal year.

In the entry and compact SUV segments, CNG is accounting for as much as 40% the demand at the country's largest carmaker, said senior executive officer, marketing and sales, Partho Banerjee. "Be it the Victoris, be it the Brezza, there are customers who are now shifting from the diesel to the CNG variants. That is a very positive sign we are seeing in the market now," he said.

"While CNG presently enjoys its strongest appeal in the entry and compact SUV segments, continued improvements in technology, infrastructure and customer acceptance could progressively open opportunities across larger vehicle categories as well," Hyundai's Garg said.

As part of its long-term vision, Hyundai is targeting an ecofriendly powertrain mix of over 50% by 2030 through a combination of CNG, electric and hybrid vehicles. Currently, 19% of the company's sales come in from CNG, up from 11.4% in FY24.