Indian car buyers are increasingly looking beyond conventional petrol models, with alternative-fuel vehicles collectively accounting for a larger share of passenger vehicle retail sales than petrol/ethanol cars for the first time.
The shift was recorded in August, when CNG/LPG, hybrid and electric passenger vehicles together made up 41.95 per cent of retail sales, compared with 40.85 per cent for petrol/ethanol models, according to data released by the Federation of Automobile Dealers Associations (FADA) on Monday.
Petrol/ethanol, however, remains the largest individual fuel category, reported The Financial Express. The crossover happened because of the combined contribution of several alternative powertrains, with CNG/LPG accounting for the biggest share.
Running costs are playing an important role in vehicle purchase decisions, while concerns around the transition to E20 fuel are also influencing consumer preferences, FADA said.
The availability of more CNG, hybrid and electric models has further expanded the choices available to consumers.
CNG/LPG accounted for 25.28 per cent of passenger vehicle retail sales in August, making it the largest component of the alternative-fuel category. Hybrids had a 9.04 per cent share and electric vehicles accounted for 7.63 per cent.
Diesel, meanwhile, made up 17.21 per cent of PV retail sales.
The change in fuel preferences has come at a time when India's passenger vehicle market delivered its strongest-ever August performance.
PV retail sales increased 16.14 per cent year-on-year (YoY) to 402,398 units, taking monthly August sales above 400,000 units for the first time.
Sales were nevertheless 3.4 per cent below the record 416,555 units sold in July.
The overall automobile market also had its best August on record, with retail sales rising 17.51 per cent YoY to 2.42 million units.
Two-wheeler retail increased 19.69 per cent to 1.71 million units, while commercial vehicle sales rose 14.45 per cent to 90,769 units. Electric vehicle penetration in the two-wheeler segment also increased to 10.68 per cent from 7.66 per cent a year earlier.
Another important feature of the August data was the pace of rural demand.
Rural passenger vehicle retail sales grew 24.99 per cent YoY, more than twice the 10.93 per cent growth recorded in urban markets.
The stronger rural performance was not limited to passenger vehicles. Rural demand also grew faster than urban demand across two-wheelers, commercial vehicles and three-wheelers.
The rural recovery was not merely temporary, pointing to additional income opportunities, increased spending and government schemes supporting rural incomes.
This stronger rural demand could become particularly relevant as the industry moves into the festive period, traditionally an important sales window for automakers and dealers.
FADA expects passenger vehicle sales to maintain their momentum over the next few months.
The half-year financial closure in September could provide another boost to retail activity.
But the industry will also have to contend with a sizeable amount of stock sitting at dealerships.
Passenger vehicle inventory at dealerships is currently estimated at around 38-40 days, substantially above FADA's recommended 21-day level.
High inventory has left dealers concerned about working capital and raises the possibility of increased discounting if consumer demand does not absorb the available stock.
The coming festive months could therefore determine whether the current strength in the passenger vehicle market translates into sustained demand.
While August produced strong headline growth and alternative powertrains collectively moved ahead of petrol/ethanol in retail sales, FADA expects actual showroom conversions between September and November to offer a more meaningful measure of demand.
For consumers, meanwhile, the changing fuel mix points to a market where CNG, hybrids and EVs are becoming increasingly prominent alternatives alongside conventional petrol and diesel vehicles.
