Few converts to alternative fuel cars despite soaring oil prices

Few converts to alternative fuel cars despite soaring oil prices
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First Published: Mon, Jun 16 2008. 10 27 PM IST

Tough pitch: A Hyundai showroom in New Delhi. Hyundai and Maruti’s CNG and LPG versions of their popular models haven’t caught on with consumers, despite lower running costs. (Madhu Kapparath / Mint)
Tough pitch: A Hyundai showroom in New Delhi. Hyundai and Maruti’s CNG and LPG versions of their popular models haven’t caught on with consumers, despite lower running costs. (Madhu Kapparath / Mint)
Updated: Mon, Jun 16 2008. 10 27 PM IST
Mumbai: India’s biggest car maker by sales,Maruti Suzuki India Ltd, launched the WagonR Duo two years ago, offering customers the choice of running the hatchback on petrol or cheaper liquefied petroleum gas (LPG).
But, the model hasn’t quite been the best-seller Maruti Suzuki may have hoped it would be. Just 53,000 WagonR Duos have been sold since its launch, despite the sharp increase in petrol and diesel prices since then. That’s about 27% of the sales posted by the entire WagonR lineup.
In general, vehicles that run on alternative fuels, such as compressed natural gas (CNG) or LPG are yet to take off in India, most auto makers agree.
For instance, Hyundai Motor India Ltd’s Santro CNG, launched last year, accounts for only about 10% of overall sales in New Delhi, said a company spokesperson.
Tata Indica’s CNG version also accounts for less than 10% of the model’s overall sales, according to one dealer who did not want to be identified because he is not authorized to speak to the media.
Safety, performance and availability concerns have kept motorists in India away from vehicles that use alternative fuels such as CNG or LPG.
Tough pitch: A Hyundai showroom in New Delhi. Hyundai and Maruti’s CNG and LPG versions of their popular models haven’t caught on with consumers, despite lower running costs. (Madhu Kapparath / Mint)
The cost of running a car on CNG, the most efficient fuel available in the market, is about Rs1 per km, compared with between Rs3.50 and Rs5 a km for a petrol version. The cost of running an LPG car is about Rs2.5 per km.
Motorists have the option of buying a CNG or LPG vehicle from a car maker’s showroom or having a conversion kit installed in their vehicles to switch from petrol or diesel variants.
Despite the lack of enthusiasm, Sagas Auto Tec Pvt. Ltd, a supplier of gas kits mainly for three-wheelers such as auto rickshaws, plans to target four-wheelers from July.
“In the first year of operation, we plan to sell about 20,000 to 25,000 kits. This is including the ones for commercial vehicles like cabs and buses,” Sanjay Kumar Jhadhav, national business manager for Sagas Auto, said in a phone interview.
Safety remains a key concern among consumers, Jhadhav said. “There is some sort of education that needs to be given to the consumers when they go for these converter kits. If properly taken care of, they are quite safe.”
Motorists who have switched to LPG or CNG also complain that their vehicles do not perform as well as their petrol cars do. “There is a drop in power when you convert a vehicle that runs on petrol to either CNG or LPG,” said K.K. Gandhi, executive director (technical) at the Society of Indian Automobile Manufacturers, an industry body.
“There is (also) an increase in pollution level and lower fuel economy when the car has run for more than 100,000 kms,” said an engineer at an auto maker who did not want to be named. “But, this is hardly noticeable in many cases.”
Auto makers say their LPG and CNG cars meet all safety standards and regulatory norms. Maruti Suzuki fits LPG kits on its cars at the assembly line itself while Hyundai Motor India has tied up with CEV of South Korea to install CNG converter kits at dealer premises. Both car makers offer warranties on their LPG and CNG cars.
“We have modified the engine (of our LPG cars) to achieve optimum performance and fuel economy, and also to meet emission regulations,” said I.V. Rao, Maruti Suzuki’s managing executive officer- engineering.
June’s 10% increase in the price of petrol and diesel—the second hike in the year—and surging inflation may win over more converts to alternative fuels.
Indian inflation rose to a seven-year high of 8.75% in the week ended 31 May, and car loans are expected to become more expensive after the Reserve Bank of India tightened money supply and raised a key interest rate.
The government has also raised excise duty on cars with a capacity above 1,500 cc, in a bid to discourage purchases of fuel-guzzlers.
Car makers are adding to their range of alternative fuel vehicles to give buyers more options.
Maruti Suzuki recently launched an LPG version of its old workhorse, the entry-level Maruti 800, while Hyundai Motor India introduced a CNG version of its Accent model. General Motors India Pvt. Ltd and Ford India Pvt. Ltd too are planning such variants.
Research firm Frost & Sullivan forecasts that the share of LPG and CNG kits sold to vehicle makers will account for 36% of overall kit sales, including those to outside dealers, by 2012, up from 29% in 2006.
(ammar.m@livemint.com)
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First Published: Mon, Jun 16 2008. 10 27 PM IST
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