Maruti Suzuki bets on CNG to meet BS-VI norms, expects 44% jump in sale

Leader in the car market, Maruti is encouraged by government plans to expand the network of CNG filling stations

Maruti Suzuki India is betting on compressed natural gas (CNG) as it gears up to vacate the diesel car market ahead of the enforcement of Bharat Stage-VI (BS-VI) emission norms.

They envisage stepping up sales of CNG models to 150,000 by the end of this financial year, from 104,000 units last year, said a top official of the company.

Leader in the car market, it is encouraged by government plans to expand the network of CNG filling stations. The latter’s aim, beside boosting a cleaner fuel to address pollution concerns, is to reduce the import bill for crude oil.  

Maruti is optimistic on CNG emerging as a fuel of choice but much depends on the infrastructure, said Shashank Srivastava, its executive director for sales and marketing. Beside being an environment-friendly fuel, he said, it would be important from the aspect of meeting the CAFE (corporate average fuel efficiency) norms.

CAFÉ, a sales-volume weighted average, applies for every automobile maker. The regulation took effect from April 1, 2017. Under this, the average carbon dioxide emission of a manufacturer’s fleet must be less than 130 gm per km till 2022 and below 113 gm per km thereafter.

“We already have seven CNG models. It is only a question of CNG availability. Once consumers have the confidence and the inconvenience of long queues is eliminated, selling the model is not an issue,” said Srivastava.

At present, Maruti sells the CNG variants of its Wagon R, Celerio, Alto K10, Eeco and Dzire. Last month, it added the Ertiga CNG. Before the BS-VI emisison norms take effect, it plans to strengthen its line up of CNG models.  

The government is going ahead with a massive push for cleaner fuel, coupled with an expansion of city gas distribution (CGD). The ninth and tenth rounds of CGD bidding are expected to see investments of Rs 1.2 trillion in a decade. A major chunk of the business is dependent on CNG.

The general aim is to raise the share of natural gas to 15 per cent in India’s energy basket, from around 6 per cent now.  

The number of CNG vehicles in India stood at 3,090,139 units, according to April 2018 data of the Petroleum and Natural Gas Regulatory Board and Petroleum and Planning Analysis Cell, both official bodies. The country had 1,424 outlets then and another 7,924 were to be added by March 2029.   

“The CNG potential in India is still undertapped,” said Puneet Gupta, associate director at IHS Markit, a sales and forecast firm. He expects further momentum after April 2020, when the BS-VI norms take effect and companies like Maruti phase out their diesel offerings, particularly in the compact car segment. Helped by expansion in the distribution network.

“We expect the market for CNG models to increase two to three times by financial year 2022,” added Gupta, with the absence of diesel resulting in this being a higher value proposition.