CNG penetration higher in rural markets: Hyundai

India’s second-largest carmaker by volume, Hyundai Motor India Ltd says the penetration of compressed natural gas (CNG)-powered vehicles is higher in rural markets than urban areas.

The penetration of CNG models stands at 12.3% in urban markets and 14.6% in rural markets as of October 2024, the South Korean carmaker’s India unit says.

CNG car penetration grew from 8.8% in FY22 to 10.7% in FY24 in urban markets, and from 7.1% in FY22 to 12.0% in FY24 in rural markets, says Hyundai Motor India.

Maharashtra, Gujarat, Uttar Pradesh are among the top three states in terms of CNG penetration while Pune, New Delhi and Ahmedabad were among the top three cities.

The carmaker recently introduced dual cylinder CNG option for two of its models Grandi10 Nios and Exter. “We are witnessing good traction of these two variants which has helped us with our overall CNG penetration which increased to 13% in the second quarter of FY25,” says Unsoo Kim, managing director and CEO of Hyundai Motor India.

HMIL achieved its highest-ever monthly CNG contribution of 14.9% (8,261 units) to domestic sales volume in October 2024. Currently, HMIL offers CNG options to customers in its three models – Grand i10 Nios, Aura and Exter. CNG penetration in Grandi10 NIOS is 17.4%, while it is 39.7% for Exter and 90.6% for Aura (as of October 2024).

“The introduction of Hy-CNG Duo is aimed to meet customer demands of providing ample space with high mileage and safety. This has helped us achieve highest ever CNG penetration of 14.9% in October 2024. Company fitted CNG system with 3 years warranty assures maximum assurance for customers. At present, India already has more than 7,000 CNG stations and aim is to have approximately 17,500 CNG stations by 2030 which will further fuel the CNG demand,” says Tarun Garg, whole-time director and chief operating officer, Hyundai Motor India.

This increasing penetration of CNG powertrain comes at a time when the company’s volumes have been impacted due to the slowdown in the domestic auto sales. The subdued demand in sales is reflective of the cyclicality and seasonality in the industry.

“The Indian auto industry is cyclical in nature and has its ups and downs. After phenomenal growth in last 2-3 years due to the pent up demand post Covid, the current demand moderation is very natural. However, in the mid to long term we are confident of a sustained demand momentum in the industry,” says Kim.

Despite the headwinds in the domestic markets, Hyundai continued to grow stronger on premiumisation through continuous growth in SUV contribution. During the quarter, it sold 1.2 lakh SUVs, accounting for 68.6% of overall volumes. SUV penetration for the industry is at 54.9%.

The automaker says the contribution of higher trims with features like sunroof and ADAS remained healthy. The contribution of hatchbacks to total sales declined, in line with industry while sedans contributed 12% to total sales in Q2 FY25.