Rising Gasoline Costs Constrain CNG Penetration In Business Automobiles: Report

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Rising Gasoline Costs Constrain CNG Penetration In Business Automobiles: Report
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Rising Gasoline Costs Constrain CNG Penetration In Business Automobiles: Report
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Medium-term prospects stay beneficial given the push for cleaner autos, Icra scores mentioned.(File)

New Delhi:

Rising fuel costs have constrained CNG (Compressed pure fuel) penetration in business autos to 9-10 per cent within the present fiscal from peaks of 16 per cent, Icra Scores mentioned at this time.

A spurt in international power costs has led to a 70 per cent leap within the worth of CNG within the final one 12 months. This has narrowed the hole between the gas and diesel, blurring the inducement to shift to the cleaner gas.

In an announcement, the ranking company mentioned CNG penetration within the home business car (CV) sector has witnessed a decline within the present fiscal, particularly within the MCV (Medium Business Automobile) truck section.

“Rising CNG costs have narrowed the hole with diesel and in flip, diminished the working value financial savings from CNG autos, which has been the important thing deterrent,” it mentioned.

However the latest decline witnessed in CNG penetration, medium-term prospects stay beneficial given the bettering CNG fuelling infrastructure and push for cleaner autos, it added.

Icra mentioned CV trade has witnessed a contraction within the penetration of compressed pure fuel (CNG) pushed autos within the present fiscal 12 months, which comes after witnessing a spike within the earlier 2021-22 fiscal 12 months.

The autumn has been notably noticeable within the medium business autos (MCVs) (12-16 ton) within the items service class.

“The proportion of autos powered by CNG has dropped from 38 per cent in FY2022 to 27 per cent in first eight months of FY2023,” it mentioned.

Nevertheless, the marketplace for passenger carriers and buses continued to point out a gradual acceptance of autos powered by CNG, which has been supported to some extent by the federal government’s push for greener autos.

“This, together with electrical car adoption, is predicted to proceed going ahead as properly,” Icra mentioned.

Commenting on the developments, Sruthi Thomas, Assistant Vice President & Sector Head – Company Scores, ICRA Ltd, mentioned, “The contraction in CNG car gross sales within the home CV sector within the present fiscal has largely been on account of the narrowing hole between CNG and diesel costs, which has diminished the working value financial savings from CNG autos.” The working prices for CNG autos elevated by about 20 per cent over the previous 12 months and are even increased vis-à-vis comparable diesel variants in sure cities like Delhi and Mumbai, by 5-20 per cent now.

“Coupled with the upper value of the car and decrease load-carrying capabilities of CNG vans, the financial case for its adoption has grow to be far much less compelling,” she mentioned.

Accordingly, month-to-month CNG gross sales of CV, which had peaked at 11,000-12,000 models, are trending at 6,000-7,000 models now.

“It will probably proceed over the near-to-medium time period given the continued geopolitical challenges, particularly the Ukraine-Russia conflict, and its affect on international fuel costs,” she mentioned.

Icra mentioned the rise in fuel costs has not been secular, and sure cities proceed to keep up a marked worth differential between diesel and CNG.

This has resulted in different developments in CNG penetration throughout areas within the present fiscal.

The excessive variability in CNG costs throughout areas (various from Rs 59 per kg in some cities to Rs 90 a kg in others) has additionally impacted the penetration.

“Given the developments seen within the sector, CV OEMs are more and more specializing in creating alternate gas/expertise autos, together with introducing new fashions within the electrical car (EV) house in choose segments, and have slowed down the tempo of introduction of CNG fashions,” Thomas mentioned.

OEMs are additionally investing in alternate applied sciences similar to hydrogen gas.

“That mentioned, however the latest decline witnessed in CNG penetration, medium-term prospects stay beneficial given the bettering CNG fuelling infrastructure within the nation and a basic push for cleaner autos,” she added. 

(Apart from the headline, this story has not been edited by NDTV employees and is revealed from a syndicated feed.)

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