Maruti says 40 percent of pending orders for this pocket-friendly CNG despite rising prices
03 May 2022 | 9710 Views | By Mayank Dhingra
Maruti Suzuki has said that 40 percent of its current backlog is for CNG models. That accounts for 129,000 units out of 325,000 order pending at end-April.According to Shashank Srivastava, senior ED, Marketing & Sales, MSIL, “CNG is doing very good numbers for MSIL, and almost 17 percent of ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Maruti Suzuki has said that 40 percent of its current backlog is for CNG models. That accounts for 129,000 units out of 325,000 order pending at end-April. According to Shashank Srivastava, senior ED, Marketing & Sales, MSIL, “CNG is doing very good numbers for MSIL, and almost 17 percent of our portfolio’s sales are being contributed by CNG variants. In the models, where we have a CNG option, the contribution is about 33 percent.”
Maruti offers CNG options on 9 of its 15 models. In FY22, CNG sales increased 44 percent over 162,000 units sold in the previous fiscal to 264,000 units with the WagonR and Ertiga CNG contributing a major portion. Maruti also offers CNG on the Alto, S-Presso, Celerio, Eeco and Dzire for individual buyers, and the Tour M and Tour H3 for fleet customers. Demand for CNG has witnessed a spike for India’s largest carmaker in the last couple of years primarily because of its complete exit from the diesel segment in April 2020 on the one hand and demand for more affordable options given the high prices of fuel.
Maruti’s CNG sales have grown from 76,000 units in FY18 to 105,000 units in FY19, 106,000 units in FY20, and to 116,000 units in FY21. Diesel used to account for about 22 percent of MSIL’s cumulative sales but the company says demand will gradually taper off as emission norms become even tighter. “Diesel has dropped from being at 58 percent of the total industry PV volumes some 5-6 years ago to 18 percent in FY22. For Maruti, CNG is filling that gap rather quickly, despite it being available only in nine Maruti models,” Srivastava added.
Going forward, Maruti plans to offer CNG in more premium offerings such as the Baleno and Ciaz which it retails from the premium Nexa outlets. This is because “running costs are extremely important even in at the higher end of the spectrum”.
Rising prices worrying customers
However, while the trigger for customers to switch towards CNG was the low fuel cost as well as higher fuel efficiency, recent hikes in CNG have got buyer concerned. According to Delhi-based MK Kumar, buying a CNG-equipped car made absolute sense in December 2021, when he purchased a brand-new WagonR CNG, but CNG prices today have toppled the math.
CNG prices in the national capital have registered a 35 percent increase since December 2021, when they hovered around the Rs 53 mark, and now retail at Rs 71.61 per kilogram, a significant 35 percent increase. Mumbai saw CNG prices go up by Rs 4 per kilogram taking the retail cost to Rs 76 per kilogram.
While Kumar’s 800-odd kilometre monthly run has him wondering if CNG was the answer over petrol by paying almost Rs 100,000 premium, the fact that “the calculation even at over Rs 70 per kilogram is in favour of CNG as the cost of running a CNG vehicle comes down to roughly Rs 1.90 per kilometre, compared to Rs 5.20 per km for a petrol or diesel works well as “there’s still a substantial difference”, says Srivastava.
“As long as there is high differential between CNG prices and petrol, the demand for CNG should remain strong. However, we have see how this gap in prices moves,” he added.
Maruti is also seeing a significant uptick in sales of its CNG cars in South Indian cities such as Bengaluru where the offtake used to be poor, “but the growing number of CNG pumps is boosting demand,” according to Srivastava.
“We expect CNG trims to contribute even further to our sales, provided the supply side allows for an uninterrupted production of these vehicles,” Srivastava signed off.