Future of small cars lies in the CNG market for CAFE compliance: Hyundai's Tarun Garg

As Hyundai Motor India's small car penetration dropped to 20% between April and December 2024, the company views the segment as key to attracting first-time buyers, expanding its CNG footprint, and ensuring compliance with India's stringent CAFE norms in the future.

“Every year, we feel it is bottoming but it gets a new bottom. We are very much there in the segment and we are using the small car platform not only to get first time buyers but also for CAFE norrms compliance,” Tarun Garg, Whole-time Director & Chief Operating Officer, Hyundai Motor India told reporters at the company’s Q3 FY25 press conference.

In FY24, small cars or hatches were 27.6% of the market. This year, it has further dropped to 23.2%. As far as Hyundai is concerned, Garg adds, the penetration was at 22.9% in FY24 and this year, from April-December, it is at 20.2%. “Nios with the CNG is going very strong and the dual cylinder CNG is helping us really get the numbers and even Aura or even Exter are really helping us. I think the thing is that the customer buying price or the aspiration has gone up and he is not willing to compromise on 6 airbags. He wants a minimum level of comfort and that is where Nios is acting as our entry level,” he said.

In Q3 of the current finacial year, the company saw its highest-ever CNG penetration, reaching 15% as compared to 11.9% in the same quarter last year. “The dual-cylinder CNG technology in Nios and Exter continues to elevate our CNG adoption reinforcing our commitment to sustainable mobility. We remain focused on enhancing our rural presence by actively expanding our network to better serve these markets. Introduction of the innovative dual-cylinder CNG technology resonated well with buyers, translating to the highest ever CNG contribution of 13.1% during the calendar year 2024,” he said.

In the ongoing finacial year, overall CNG penetration surged from 13.7% in Q1 to 25.3% in Q2, followed by a further jump to 36.5% in Q3. A key driver of this growth was the introduction of the dual-cylinder CNG system in Q2, which played a significant role in accelerating adoption, according to Garg.

When it comes to individual models, Nios saw a sales increase from 16% in Q1 to 19.5% in Q2, reaching 20.3% in Q3. Aura followed a similar trend, rising from 86.5% sales in Q1 to 89.8% in Q2 and 92% in Q3. This strong growth underscores the impact of dual-cylinder technology and increasing customer demand for CNG vehicles, driving Hyundai’s market expansion. "Customer's penchant for buying more CNG models has helped us increase our penetration and volumes. The trend is very clear that it's going to go up," Garg said.