The commercial vehicle industry saw a decline in sales of Compressed Natural Gas (CNG) operated vehicles in the current fiscal, after witnessing a spike in the previous fiscal. The CNG-powered vehicles sales dropped from 38 per cent in FY22 to 27 per cent in 8 months of FY23.
According to ICRA, the fall has been particularly noticeable in the medium commercial vehicles in the goods carrier class.
Rising gas price constraints saw penetration in the commercial vehicle sector dip to 9-10 per cent in FY23 from peaks of 16 per cent.
“The operating costs for CNG vehicles increased by 20 per cent over the past year and are even higher vis-à-vis comparable diesel variants in certain cities like Delhi and Mumbai, by 5-20 per cent now. Coupled with the higher cost of the vehicle and lower load-carrying capabilities of CNG trucks, the economic case for its adoption has become far less compelling. Monthly CNG sales of CV, which had peaked at 11,000-12,000 units, are at 6,000-7,000 units now. This will likely continue over the near-to-medium term given the ongoing geo-political challenges, especially the Ukraine-Russia war, and its impact on global gas prices,” said Sruthi Thomas, Assistant Vice-President & Sector Head – Of Corporate Ratings, ICRA Limited.
Passenger CNG vehicles
While the commercial sector witnessed a dip in sales of CNG-operated vehicles, passenger vehicles continued to show growth of CNG-powered vehicles, according to ICRA.
In the month of November, 32,462 CNG-powered vehicles were registered as per the Vahan dashboard that records vehicle registrations.
While certain regions like Gujarat and Maharashtra witnessed approximately 30 per cent increase in CNG prices since January 2022, resulting in a visible contraction in CNG penetration levels during YTD FY2023, some States like Tamil Nadu witnessed fairly steady CNG prices and penetration levels. Cities like Delhi continued to witness high levels of CNG penetration despite the steep 48 per cent increase in CNG prices, per ICRA.