According to CARE Ratings research, the CNG vehicle market in India has shown extraordinary resilience despite a significant increase in global petrol prices. This pattern will continue in the medium term, as per the anticipations. According to the research, despite a 49 per cent increase in average petrol prices, sales volumes of CNG cars increased by 40.7 per cent during the fiscal year 2023.
Global petrol prices have risen due to the economic recovery following Covid-19, the ongoing Russia-Ukraine crisis, and production choices made by major fuel producers. According to CARE Ratings, India's CNG car industry has shown unexpected resilience.
Except for the CNG cargo Trucks, all types of CNG vehicles have shown a substantial demand rise. The reduction in demand for CNG goods vehicles, on the other hand, attribution can take place to last-mile delivery companies' preference for electric light commercial vehicles (LCVs).
What is Driving CNG Vehicle Demand?
According to the survey, there is a link between continuing demand to a large price gap between petrol and compressed natural gas, which reduces operating expenses for CNG car owners even when fuel prices rise. Changing the fuel pricing formula in April 2023 will likely help CNG vehicle sales in the medium term to reduce volatility in CNG costs.
CNG-based vehicles, especially CNG Auto-Rickshaws, play an important role in passenger transportation as not only are they cost-effective but eco-friendly as well.
CNG is not Only More Environmentally Friendly but also More Cost-Effective
If emphasising the economic benefits of CNG, the fuel continues to offer significant cost reductions for those with lengthy commutes and taxi drivers who travel big distances regularly.
With the reduction in CNG prices and improved stability under the newly administered Price Mechanism, the further enhancement of the attractiveness of CNG as a fuel has been in progress, which will drive CNG vehicle sales in FY24.
CNG Rates are Less Volatile
According to CARE Ratings, the government has addressed petrol price volatility with a new pricing methodology.
Natural gas produced from ONGC/OIL nomination fields, NELP blocks, and pre-NELP blocks will now be indexed to crude oil prices and subject to a floor and a ceiling. However, gas generated from new wells or well interventions in ONGC and OIL's nomination fields will be permitted a 20% premium above the APM (administered pricing mechanism) price.
Previously, the determination of domestic gas prices was under the 2014 domestic gas pricing guidelines, which called for the declaration of costs for six months based on volume-weighted prices overcoming at four gas trading hubs — Albena, Henry Hub, Russia and National Balancing Point (UK)— for 12 months, with a quarter time lag.
The Future of CNG Vehicles and EVs
Electric vehicles may gradually replace Internal combustion engine-based cars, including CNG vehicles, as the electric vehicle infrastructure increases and the cost of electric vehicles are lower due to battery technology developments.
EVs now account for about 1% of new automotive sales in India, whereas CNG vehicles account for 8.8% of all passenger vehicles.
The great majority of CNG cars on the road today are commercial vehicles, specifically trucks and buses.
With limited range and a lack of charging infrastructure, EVs will take longer to displace long-haul commercial vehicles.
Truck:https://trucks.tractorjunction.com/
auto rickshaw: https://trucks.tractorjunction.com/en/auto-rickshaw