As fuel prices soar, commercial vehicles buyers too are eyeing CNG options

Compressed natural gas is increasingly becoming the choice of fuel for vehicle buyers including in the commercial segment, amid the steep rise in diesel and petrol prices.

CNG-run passenger vehicles are already popular among cost-conscious consumers, but diesel is the preferred choice for commercial vehicles because the fuel offers better pulling power. But the rising price of diesel is making buyers consider CNG options, as the cost savings are significant.

The fuel cost for running a medium-duty truck for 7,000 km, at 7 km a litre of diesel, ranges between Rs 80,000 and Rs 90,000, but if the fuel is CNG, the cost would reduce to Rs 45,000-50,000, said Vinod Aggarwal, managing director of VE Commercial Vehicles.

The Gurgaon-based company that sells trucks and buses under the Eicher and Volvo brands in India has seen nearly a third of its diesel vehicle sales shift to CNG in the light and medium duty segment in the past year. At market leader Tata Motors, the share of CNG in the commercial vehicle business has increased to 6.6% in the fiscal 2021 ended in March from 4.5% the year before.

“There has been an uptick in consumer preference for CNG vehicles in both cargo and passenger transportation,” said Girish Wagh, president of Tata Motors’ commercial vehicles business unit. “Over the past 8-10 months, we have been witnessing increased enquiries for CNG vehicles from both private customers and government bodies,” he said.

The share of CNG vehicles in the commercial vehicle market has been growing year on year, and the pace has accelerated after the transition to BS-VI emission standards last year, he said.

Commercial vehicle prices increased 15-20% post the transition to BS-VI. The increasing fuel cost is further hurting operators of these vehicles.

Petrol price has crossed Rs 100 a litre in several states, while diesel touched the three-figure mark at Sri Ganganagar in Rajasthan on Saturday. In Delhi, diesel was selling at Rs 86.98 a litre and petrol at Rs 96.12 on Monday. CNG was priced at Rs 43.40 per kg.

In small commercial vehicles, CNG may offer a 25-30% advantage in operating costs over diesel and 35-40% over petrol, said Wagh of Tata Motors.

Adoption of CNG has other advantages as well — it will help avoid green taxes and levies in certain states. The availability of the fuel has also now improved. Around 3,400 CNG distribution outlets are operational in 350 cities currently, compared with 1,400 in 142 cities three-four years ago, making more buyers consider the CNG option for their vehicles.

“There is more and more migration happening from diesel trucks to CNG trucks. For instance, in light and medium duty trucks, already more than 30% of the market has moved to CNG,” said Aggarwal of VE Commercial Vehicles. “This trend is going to accelerate because the savings are very high.”

In passenger vehicles, market leader Maruti Suzuki expects sales of CNG-powered vehicles to grow 58% to 250,000 units in the ongoing financial year.

The premium on a CNG variant at Rs 75,000-80,000 over the petrol model is lower compared with Rs 1.25-1.5 lakh for diesel. The running cost of a CNG-driven Maruti Suzuki car at Rs 1.60-1.70 per km on average is less than half of Rs 4-4.10 for a petrol/diesel vehicle in Delhi.

Shashank Srivastava, executive director (marketing and sales) at Maruti Suzuki, said: “We have seen an exponential increase in demand for CNG vehicles, first of all because of the rise in price of petrol and diesel fuel. Secondly, the availability of CNG itself has improved, both geographically as well as in absolute numbers, making it emerge as a viable option for consumers.”

Maruti Suzuki, which has eight CNG-powered models in its portfolio, has plans to make the fuel option available on all its small cars in future.