Maruti Suzuki, the country’s largest carmaker, expects sales of CNG vehicles to grow 36 percent to 144,000 units in FY21. The company has eight CNG-powered vehicles in its portfolio and plans to make the fuel option available on all small cars.

South Korean rival Hyundai plans to launch the fuel option in the Hyundai XCent sedan later this year, targeting customers, especially in the fleet segment. Between them, Maruti Suzuki and Hyundai sell about a dozen factory-fitted CNG models.

“Even if we do not consider the narrowing price differential between petrol and diesel (which has triggered a shift in consumer preference for petrol vehicles), the price of fuel itself has increased significantly, which is a negative for the industry. Sales volumes will get affected if fuel prices remain high. This is where CNG emerges as a viable option,” said Shashank Srivastava, executive director (marketing and sales), at Maruti Suzuki.

The cost of running a CNG vehicle is about Rs 1.5 per km, which is less than half that of petrol and diesel vehicles. The premium paid on the acquisition cost of a CNG vehicle at Rs 50,000-60,000 is lower than Rs 1,25,000-1,50,000 of diesel vehicles.

Srivastava added, “The issue is not the acceptability but the availability of the fuel, which hindered sales of CNG vehicles earlier. However, with the government now pushing the expansion of the distribution network, the number of CNG outlets, as well as the number of cities the fuel is available in, are set to double in the next 6-7 months.”

As many as 3,400 CNG distribution outlets are scheduled to become operational across 373 cities by the end of the year. There were 1,730 CNG stations in 190 cities at the end of 2019.

While Maruti Suzuki has stopped sales of diesel cars to focus on sales of petrol and CNG vehicles, Hyundai said it will offer all three fuel options.