New Delhi: Auto major Tata Motors, which is working on a multi-pronged powertrain strategy, plans to increase the share of compressed national gas (CNG) powered vehicles in its overall sales and to equalise it with electric vehicles (EVs).
“Currently, the share of CNG in our portfolio is about 8%. By the end of the year, our aim is to reach 14%. Furthermore, we are aiming for about 25% share from CNG market by 2030. As we introduce more models, the CNG penetration will increase. We want to take up the CNG penetration equal to that of EVs,” Vinay Pant, Chief Marketing Officer, Tata Motors Passenger Vehicles, told ETAuto, in an exclusive interaction post his appointment in December last year.
Share of Tata Motors sales from different powertrain options in Q1 FY24
| Diesel | Petrol | Electric | CNG |
| 15.2% | 62.8% | 13.6% | 8.4% |
For the quarter ended June 2023, Tata Motors’ internal combustion engine (ICE) models comprise the largest share in the portfolio at about 78%.
The company, which entered the CNG space with Tiago and Tigor in January 2022, currently offers the option in three models including Tiago, Tigor, Altroz. The CNG penetration stands at around 40% for Altroz and Tigor, and about 25% for Tiago.
In an attempt to expand its product lineup, it introduced the Altroz CNG in May this year. The model is the first CNG-powered hatchback to offer a sunroof, and also debuts the automaker’s new dual-cylinder setup for CNG tanks. While the CNG tanks usually takes up the boot space, Tata Motors has placed the two 30-litre CNG tanks under the boot floor in a way that it frees up some boot space.
Our focus is to provide maximum features and not limit the prospective CNG customers with this option, Pant said.
Tata Motors targets to achieve carbon neutrality for the passenger vehicle segment by 2040. Balancing the energy-mix with different fuel technologies also helps the company to meet the Corporate Average Fuel Efficiency/Economy (CAFE) norms.
Leading automakers including Maruti Suzuki and Hyundai are also bullish on the CNG option. Maruti clocked highest ever quarterly sales of CNG vehicles at over 1.13 lakh units in the April-June 2023 period. With this, its overall CNG penetration now stands at about 27%.
The Government has set an aggressive target to ramp up the number of CNG fuelling stations across the country to 17,700 by 2030, as improved availability of the fuel would lead to enhanced interest of the consumers in the powertrain.
ICRA estimates CNG powertrain penetration in the industry to increase to levels of about 18% by CY2027, from about 11% in CY2022.
In April this year, the Cabinet Committee on Economic Affairs (CCEA) approved a new domestic natural gas pricing plan with domestic gas price at 10% of the monthly average of Indian Crude Basket and notified monthly. The revised structure led to a reduction in price of CNG by up to 10% across cities and is expected to limit material increases in the same going forward, with the Cabinet setting a ceiling price for gas produced from ONGC and OIL nomination blocks.
Shamsher Dewan, Senior Vice President & Group Head – Corporate Ratings, ICRA Limited, said that the new gas pricing policy has led to CNG prices declining to levels seen nearly a year ago, thereby providing relief to the consumers. Rising gas prices slowed down the adoption of CNG powertrains in H2 CY2022, led by a decline in the running cost differential between petrol and CNG powertrains and a consequent increase in the payback period for the latter.
“A decline in CNG prices has led to a reduction in the total cost of ownership (about 10-15% lower than petrol powertrain) for the powertrain and is likely to aid adoption for the same going forward,” he said.
Punch CNG in offing
The fourth model in Tata Motors’ lineup of getting a factory-fitted CNG kit will be the Punch. In January this year, the company unveiled the Punch CNG at the Auto Expo, which will also come with the new dual-cylinder technology for the CNG tanks. Launched in October 2022, the model is currently available in petrol and has been garnering volumes of about 11,000 units per month.
| Tata Punch | Domestic Sales (in units) |
| FY22 | 52,716 |
| FY23 | 1,33,819 |
During the past year and a half, Tata Motors gave a tough competition to Hyundai Motor India and narrowed the sales gap between them. ETAuto reported last year how Hyundai needed to fill the white space in the micro SUV segment to maintain its lead over Tata Motors. Now, with the launch of the new Exter in July this year, a lot may change in the game of garnering sales volumes.
When asked if Tata Motors is concerned with the launch of Hyundai Exter in the market, Pant said, “Tata Motors created the category for micro SUV and our sales in the segment have been robust. So far, we do not see any reason to worry.”
“In fact, there is a renewed interest in our brand since Exter has entered the market,” he added.
Special Edition models
Close to 12% to 15% of Tata Motors overall sales comes from special edition models. This year, the company introduced the new Red Dark edition for Nexon, Harrier and Safari. Last year it introduced the Camo edition for Punch.
The Dark range (including the Red Dark) now contributes to about 50% of sales for Harrier and Safari models. The automaker said introducing the special edition models offers choices to the consumers along with helping the company to bring improvements in the existing products.
In August 2019, Tata Motors launched the Dark edition of its Harrier as a limited-edition product. In July 2021, the company expanded its dark range to Altroz, Nexon and Nexon EV and in January 2022, Safari was added to the range.
Last year, ETAuto reported how one of the business strategies that worked for Tata Motors was to spoil the customers for choice.
In September 2021, the automaker introduced the Gold Edition for Safari. Following this, in February 2022, the company launched the Kaziranga edition for Punch, Nexon, Harrier and Safari. In August 2022, it brought about the Jet Edition for Safari, Harrier and Nexon. However, these editions have now been discontinued for Punch, Harrier and Safari.
Nexon, which is available in Red Dark, Jet, Kaziranga, and Dark editions, becomes the model with most number of special editions available in Tata Motors portfolio.
The strategy of offering the Special Edition models has also worked for other OEMs including Hyundai, which has the Creta Knight edition, and Skoda Auto which offers Monte Carlo, Anniversary and Lava Blue editions for certain models.
Outlook
In July 2023, Tata Motors reported a flat growth at 47,628 units as against 47,505 units in July 2022. Going forward, the company looks to grow its rural penetration, which currently stands at about 41%.
The maker of Nexon said the semiconductor shortage has improved and it does not see a major impact on sales in the coming months. It expects the festive season to augur good for sales this year.
Supported by the new launches of Harrier and Safari, expansion of CNG portfolio with Altroz and Punch, and a strong sales and service network, the automaker looks to increase its market share by the end of the on-going fiscal. For FY23, it stood at 14%.
Tata Motors has a network of about 150 sales and 850 service outlets across the country.
