Maruti’s drive to meet green norms to be fuelled by CNG

The Indian unit of Suzuki Motor Corp. has asked dealerships to bid for licences to set up their own CNG dispensing stations to keep pace with the company’s plan of selling about 200,000 CNG passenger vehicles annually by 2022 by introducing more models that run on the eco-friendly fuel, four people aware of the development said on condition of anonymity.

Maruti’s strategy to focus on vehicles that run on cleaner fuels stems from the Union government’s plan to introduce Bharat Stage VI emission norms in 2020 and subsequently stricter fuel efficiency rules in the second phase of the Corporate Average Fuel Efficiency norms by 2022.

The norms require cars to become 10% or more fuel efficient between 2017 and 2021 and 30% or more fuel efficient from 2022. The mileage improvement will be decided on the basis of litres of fuel consumed by a vehicle to run 100km. CNG is regarded as an affordable way to meet the norms, especially with diesel coming under the scanner from the courts and authorities.

Maruti’s internal target of selling 200,000 CNG vehicles by 2022 will comprise about 10-12% of its annual sales, the people cited earlier said. The company has sold about half a million CNG cars between 2010 and 2018.

But with inadequate infrastructure for distributing CNG in India, Maruti wants its dealers to bid for licences to set up fuel retail outlets across the country, said the people.

“CNG vehicles will be beneficial in the short term and Maruti being the largest manufacturer with products in the portfolio will create an ecosystem with the help of other stakeholders," said Puneet Gupta, associate director-vehicle sales forecasting at IHS Markit. “Since the vision of the government is also to build a huge network of CNG pumps across the country, Maruti’s plans seem to be in sync with the government."

Some of Maruti’s products such as the Ertiga multipurpose vehicle, Swift hatchback and Dzire compact sedan might also be offered with CNG options, the people said.

Maruti currently offers seven models with CNG options, the most by any carmaker in India.

Other makers of CNG cars in India include Honda Cars India Ltd and Hyundia Motor India Ltd.

A spokesman for Maruti declined to comment.

The government, in its efforts to arrest rising air pollution levels, has also been urging auto makers to develop environment-friendly vehicles, and is expected to install 10,000 CNG stations by 2030.

Maruti had to expedite efforts to sell more CNG cars as it would otherwise be difficult to meet the stricter fuel efficiency norms in 2022, one of the people cited earlier said.

“The target to sell around 200,000 CNG vehicles every year by 2022 is not an ambitious one if the infrastructure improves across India," said the person cited above. “A lot of cities still don’t have access to CNG, which is the biggest impediment towards increasing sales of such vehicles."

Hence, Maruti plans to increase the sales of CNG vehicles, which will be followed by hybrid and electric models. Maruti’s parent, Suzuki, and Japan’s Toyota Motor Corp. are collaborating on producing full hybrid cars, which are expected to be launched in India by the end of 2021.

“The company will not invest on behalf of the dealers since the dealers are profitable enough to invest in setting up CNG pumps on their own," the second person cited earlier said. “This move was an imperative for Maruti as it will not have substantial volumes from hybrid and electric vehicles by 2020 to compensate for the petrol and diesel vehicle production."

Currently, most of the CNG vehicles are used commercially by cab aggregators such as Ola and Uber.

According to the third person, CNG is more affordable than petrol and diesel and sales had zoomed after cab services and other public transport vehicles in the national capital region were made to compulsorily operate only CNG vehicles.

“If similar steps can be taken by other state governments, then Maruti stands to benefit with its existing range of CNG vehicles," said the third person cited earlier.