Auto players step on CNG CVs; offer wide range of models

CNG is currently priced about Rs 45 per kg in Delhi, almost half of Rs 88 per litre of diesel, and considering that the fuel efficiency of both is almost equal, the running cost of CNG vehicles is almost half that of diesel; upfront costs of buying the vehicle are also similar.

By:Updated: Sep 26, 2021 11:17 PM

Not just passenger vehicles, sales of CNG-based commercial vehicles (CVs) are rising and the trend is likely to continue. According to auto sector analysts, the pandemic-led slowdown in economic activities may have seen CVs sales dropping, but the share of CNG vehicles has remained stable. The recent rise in retail price of diesel has also prompted a lot of transporters to shift to CNG from diesel.

According to retail sales data from the government’s Vahan portal, sales of goods carriers (trucks) powered by CNG have remained largely stable over the past three years (25,729 units in FY19, 26,250 units in FY20 and 23,269 units in FY21), but have increased significantly to 31,529 units to date in the current fiscal year.

According to wholesales data from the Society of Indian Automobile Manufacturers (Siam), in FY19 total CV goods carrier sales were 9,15,537 units, but these dropped to 6,31,925 in FY20 and to 5,49,149 in FY21.

Today, most CV makers offer CNG options in goods carriers.

VE Commercial Vehicles (VECV), for example, has eight CNG models, from 4.9-tonne gross vehicle weight (GVW) to 16.02-tonne GVW. It has cumulatively sold more than 10,000 CNG goods carriers. Vinod Aggarwal, MD & CEO of VECV, told FE that the expanding CNG fuelling network, among other reasons, is boosting the demand for CNG vehicles. “For example, on the Delhi-Mumbai highway, one can drive a CNG truck all through. CNG trucks also lead to lower total cost of operation ― while the fuel is priced far lower than diesel, in CNG trucks there is no need to add AdBlue (diesel exhaust fluid that helps diesel engines meet BS6 emission norms),” he said.

CNG is currently priced about Rs 45 per kg in Delhi, almost half of Rs 88 per litre of diesel, and considering that the fuel efficiency of both is almost equal, the running cost of CNG vehicles is almost half that of diesel; upfront costs of buying the vehicle are also similar.

Last week, Tata Motors launched the CNG variant of its Tata 407 — possibly the most popular CV in India. “The CNG variant offers improved profitability of up to 35% over the diesel variant,” the company said. “This further strengthens Tata Motors’ extensive CNG portfolio, ranging from 5-tonne to 16-tonne GVW, in the intermediate and light commercial vehicle (I&LCV) segment.” Similarly, Ashok Leyland offers CNG variant of its Dost LCV.

Increased usage of CNG in trucks can also impact inflation. Preetam Mohan Singh, senior vice-president (automotive), Praxis Global Alliance, told FE that increased adoption of CNG can likely lead to a potential price drop of essential commodities. “With CNG, mass transportation costs go down, and this means the cost of transporting medicines, fruits, vegetables, which are basic necessities, could also reduce.”

However, this may not be possible unless the entire fleet shifts to CNG. Madan Sabnavis, chief economist at CARE Ratings, explained, “Usually, there are fixed freight rates between two destinations, such as Mumbai to Delhi, and these impact prices of commodities. For freight rates to change, the entire fleet has to shift to CNG.”

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