Maruti Suzuki CNG demand drops post multiple fuel price hikes

Maruti Suzuki has revealed that there has been a drop in demand for CNG models after multiple price hikes in 2022 that made the fuel as expensive as petrol. The Ertiga MPV has the most demand in Maruti's CNG line-up, which currently features 12 factory-fitted CNG models – the largest for any carmaker in India – including the  Brezza, Grand Vitara, Swift, Dzire and Baleno. 

1. CNG received eight price hikes in 2022
2. 56 percent of Maruti's CNG orders are for Ertiga 
3. Maruti Suzuki currently offers 12 CNG models  

Maruti Suzuki sees a drop in demand for CNG vehicles

CNG saw eight price hikes between January 2022 and December 2022, narrowing the gap with petrol. “There has been a decline in demand for CNG cars, particularly since June 2022, when the price gap between petrol and CNG started narrowing significantly," said Shashank Srivastava, senior executive director, Sales & Marketing at Maruti Suzuki India. "However, we had introduced six new models with CNG in FY2023. The new launches led to our CNG penetration increasing from 15.5 percent to 19 percent.”    

Nonetheless, despite the CNG price increases, Indian buyers are still clocking plenty of kilometres and are increasingly opting for the greener CNG, which is also inherently more efficient than petrol. Overall though, Maruti Suzuki India continues to remain confident about the potential of CNG-powered passenger vehicles in India. The market is witnessing a rapid shift away from diesel, and a transition to electric vehicles while also strengthening the CNG infrastructure across the country. 

Maruti's CNG order backlog

Despite the said drop in demand, at the end of FY2023, Maruti Suzuki's order backlog stood at 3.8 lakh units, of which CNG-equipped variants form 1.21 lakh units or 32 percent. The popular Ertiga MPV, offered with both petrol as well as CNG fuel options, is the one which accounts for the highest with 56 percent of pending CNG model orders.

“The overall production numbers for the Ertiga have been a constraint and the CNG backlog in other models might not be as high,”  said Srivastava.

While supply chain challenges are the major factors impacting OEM production, the semiconductor shortage remains a key impediment. According to Srivastava, Maruti Suzuki India lost out on the production of around 46,000 units in the third quarter of FY2023 due to the shortage and was also impacted in the last quarter of FY2023. 

"In some of the models, there is continued pressure on the production and availability largely because of the semiconductor issue. We expect the problem to persist in the near future, and it remains difficult to predict when it will be fully resolved," added Srivastava.

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