CNG gets a thumbs down in Gujarat

With compressed natural gas (CNG) prices touching Rs 63.8 per kg here, the difference between the green fuel and petrol has reduced to a meagre Rs 2-3 per unit. The impact: sales of CNG cars have come crashing, showing an over 80 per cent drop in the last few months. Gujarat, being one of the three major markets for CNG cars, is losing its advantage, say car makers.

Hardly 100 CNG cars sell in Ahmedabad per month now, claim city-based dealers. Maruti Suzuki India Ltd, Hyundai Motor India Ltd and General Motors India together sold close to 300 CNG cars in the city in May. "Around a year back, around 20 per cent of the sales of models like the WagonR would did from CNG variants, but now, it has dwindled to less than five per cent. The gap between petrol and CNG has narrowed, and there is an expectation of further spike in CNG prices," a senior Maruti official says.

In comparison, in cities like Delhi and Mumbai, CNG vehicles account for around 20 per cent of overall sales for the company, the official adds. Gujarat accounts for nearly 10-12 per cent of Maruti's national sales and earlier used to account for over 25 per cent of national CNG car sales.

GM India says CNG sales are hardly 5-10 per cent of net car sales in these three major CNG markets (Delhi, Mumbai and Ahmedabad) in the country. Says P Balendran, vice-president, corporate affairs of GM India: "In all the three markets where we sell CNG vehicles, diesel accounts for most sales. However, with the recent rise in diesel prices, the share of diesel which was earlier 85 per cent has come down to around 70 per cent. Petrol vehicles are gaining share."

He strongly feels all car companies are waiting for the CNG infrastructure to be in place before its real sales potential can be realised. "Even in cities like Delhi and Mumbai, one would find it difficult to come across CNG stations in the outskirts," Balendran adds.

Meanwhile, more than the original equipment makers (OEMs), the impact of the spiralling CNG prices has been on the CNG kit-fitters. There are around 430 authorised CNG kit-fitters in Gujarat, of which around 100 have closed down in the last one-and-a-half years. "Sales had started dropping since June last year, when CNG prices started picking up. The entire fuel pricing dynamics have changed in the state," says Anil Singhvi, president of the Ahmedabad Automobile Association and owner of Divine Auto Gas Systems.

While on an average a CNG vehicle costs around Rs 50,000-55,000 more compared to a petrol model, the cost of retrofitting is much lesser at around Rs 30,000-35,000 per car, the main reason why so many kit-fitters thrived in the state. "There was a time when we were converting around 5,000-6,000 cars per month in Gujarat, and now it has boiled down to less than 100 per month. First is the overall slowdown in the industry, and secondly the steep CNG prices have almost blowed a death knell to the industry," says Singhvi. Retrofitters had recently met the state energy minister Saurabh Patel and finance minister Nitin Patel to discuss their plight.

Many OEMs, too, used to rely on dealerships for offering CNG options in their cars. Hyundai, for example, does not have factory-fitted CNG kits, but offers retrofitment at the dealer-end and a warranty on that. A leading Hyundai dealer in the city claims there is hardly any demand for conversion of vehicles to CNG at the moment.

Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers feels for the true potential of a particular fuel to be realised, first it should be available across the country, and also at market rates. "When a particular fuel is sold at the market price, then only one can see the real demand for the fuel, otherwise it would always be a skewed demand."