Why is Bajaj betting on CNG while everyone else is focused on EVs?: Business Case Study
Summary
TLDRThe Indian government is promoting alternative fuels like CNG (Compressed Natural Gas) to reduce carbon emissions and reliance on crude oil. With increasing demand, companies like Bajaj Auto and Maruti Suzuki are leading the charge in the CNG vehicle market. CNG vehicles offer lower emissions and are more cost-efficient than petrol vehicles. However, India's CNG infrastructure is still limited, but plans are underway to expand it significantly. The video highlights the growing business opportunities in the CNG market, including setting up fueling stations and investing in CNG vehicle fleets.
Takeaways
- 🌿 The Indian government is heavily focused on green fuels, such as electric vehicles, ethanol, and compressed natural gas (CNG), to reduce carbon emissions and pollution.
- 💸 Fluctuating crude oil prices and reliance on imports drain India's foreign exchange reserves, making the push for alternative fuels even more crucial.
- 🔧 Nitin Gadkari is optimistic about India's potential to not only reduce fuel imports but also become a fuel exporter through the adoption of green fuel alternatives like CNG.
- 🚗 CNG-powered vehicles are gaining traction, with their share in passenger vehicle sales rising from 3.5% in 2019 to 11% in 2022, and projected to reach 18% in the next five years.
- 🏆 Companies like Bajaj Auto and Maruti Suzuki dominate the CNG market, with Bajaj having a 79% share in the three-wheeler CNG segment and Maruti holding a 75% market share in the four-wheeler CNG segment.
- 💡 Bajaj Auto capitalized on the Supreme Court's 1998 decision to switch Delhi's buses and autos to CNG, launching India's first CNG-powered three-wheeler by 1999.
- 📈 Retrofitting petrol vehicles with CNG systems is a growing trend, allowing middle-class families to save up to ₹50,000 annually.
- 🚉 India's CNG infrastructure is still underdeveloped, with only 6,088 CNG stations compared to over 67,000 petrol stations, creating a massive opportunity for expansion.
- 🏗️ The Indian government aims to increase the number of CNG stations to 17,700 by 2030, further boosting the CNG market.
- 🔋 The launch of the world's first CNG motorcycle by Bajaj Auto signals a new revolution in the two-wheeler segment, offering cheaper and more environmentally friendly transport options.
Q & A
What is the Indian government's stance on alternative fuels?
-The Indian government is highly bullish on alternative fuels, especially green fuels like electric vehicles, ethanol, green hydrogen, and pollution-free fuels like compressed natural gas (CNG). These alternatives are seen as vital to reducing India's carbon emissions and dependence on fluctuating crude oil prices.
Why is compressed natural gas (CNG) considered a game-changing fuel for India?
-CNG is considered game-changing because it is environmentally friendly, emitting less harmful gases compared to petrol and diesel. It is also significantly cheaper, reducing the running costs for vehicles by up to 50%, which can save Indian families thousands of rupees each year.
How has the market for CNG-powered vehicles grown in recent years?
-The market share of CNG-powered vehicles has grown from 3.5% of passenger vehicle sales in 2019 to 11% in 2022, with expectations of it reaching 18% in the next five years. Companies like Bajaj Auto and Maruti Suzuki have been leading this growth.
What role has Bajaj Auto played in the CNG revolution?
-Bajaj Auto has been instrumental in the CNG revolution, launching India's first CNG three-wheeler in 1999. They gained a significant first-mover advantage by entering the market early, which has allowed them to capture 79% of the CNG three-wheeler market.
What is the significance of Bajaj Auto's upcoming CNG-powered motorcycle?
-Bajaj Auto's CNG-powered motorcycle is significant as it could disrupt the two-wheeler market in India. With lower carbon emissions, cheaper running costs, and better mileage, this could lead to greater adoption of CNG in the two-wheeler segment, similar to the impact CNG had on three-wheelers.
How has the Indian government supported the CNG market?
-The Indian government has supported the CNG market through various policies, including the removal of permits for CNG and electric commercial vehicles. The government has also set aggressive targets to increase the number of CNG fueling stations from 6,088 to 17,700 by 2030.
What challenges does India face in expanding the CNG infrastructure?
-One major challenge is the lack of sufficient CNG fueling stations. There are only 6,088 CNG stations compared to over 67,000 petrol and diesel stations, causing long queues at existing CNG stations and limiting the growth of CNG vehicle adoption.
What business opportunities exist in the growing CNG market in India?
-There are significant opportunities in setting up CNG fueling stations, starting CNG-powered fleets, and retrofitting petrol vehicles with CNG cylinders. The upcoming CNG terminal in Bhavnagar, Gujarat, by 2026 also opens new avenues for investment and expansion.
Why did CNG adoption in India begin in 1998?
-CNG adoption in India began in 1998 when the Supreme Court of India ordered the Delhi government to implement CNG or LPG fuel for all autos and the entire bus fleet. This marked the start of India's CNG revolution.
Why is the adoption of CNG vehicles still relatively low compared to petrol vehicles?
-Despite being more cost-efficient, CNG vehicle adoption remains low due to the underdeveloped CNG infrastructure. There are far fewer CNG fueling stations compared to petrol and diesel stations, limiting accessibility for potential users.
Outlines
🚗 India's Push for Alternate Fuels and CNG Revolution
The Indian government is focused on reducing dependency on foreign crude oil by embracing alternate fuel sources like green hydrogen, electric vehicles, and CNG. Fluctuating oil prices and pollution concerns are driving this shift. Nitin Gadkari is optimistic that India will not only reduce fuel imports but also become an exporter. Compressed Natural Gas (CNG) is seen as a game-changer, with major auto companies like Bajaj Auto and Maruti Suzuki leading the charge. Market reports show rapid growth in CNG vehicle sales, and India's automotive sector is witnessing multiple fuel revolutions—electric vehicles (EVs), hydrogen, and CNG. This fuels significant business opportunities for entrepreneurs and investors alike.
🌍 Why CNG is a Game-Changing Fuel
CNG, or Compressed Natural Gas, is extracted from the earth, similar to petroleum, and compressed into cylinders for use in vehicles. It is considered environmentally friendly, emitting significantly less CO2 than petrol or diesel. It is also cheaper, with CNG-powered vehicles offering substantial savings on fuel costs—up to 50% cheaper than petrol. The Supreme Court's 1998 mandate to implement CNG for public transport in Delhi marked the beginning of India's CNG revolution. Companies like Bajaj Auto capitalized on this foresight, launching CNG-powered vehicles well ahead of their competitors, which has allowed them to dominate the market.
📈 Bajaj Auto’s Market Dominance in CNG Vehicles
Bajaj Auto’s early adoption of CNG technology in the late 1990s gave them a significant first-mover advantage. After the 1998 Supreme Court ruling, Bajaj shifted its focus to CNG, launching the first CNG-powered three-wheeler in 1999. Competitors like Mahindra and TVS only entered the market years later, giving Bajaj a huge lead. In FY23, 67% of auto-rickshaws in India were powered by CNG, and Bajaj Auto held a staggering 79% market share. Bajaj's extensive dealer network and technical expertise have allowed them to maintain this dominance, while the CNG four-wheeler market has also grown rapidly, with companies like Maruti Suzuki leading the way.
🏍️ Bajaj Auto’s Disruption of the Two-Wheeler Market
Bajaj Auto is set to disrupt the two-wheeler market by introducing the world’s first CNG-powered motorcycle. This move is significant because CNG motorcycles offer lower carbon emissions and are cheaper to operate compared to petrol bikes. With the Indian government’s push for zero emissions, CNG motorcycles are expected to gain strong support. Bajaj’s strategy mirrors its earlier success in the three-wheeler market, aiming to establish dominance in this sector as well. Entrepreneurs and investors can benefit from this growing CNG market by exploring opportunities in vehicle retrofitting, starting CNG stations, or leveraging new government policies.
Mindmap
Keywords
💡CNG (Compressed Natural Gas)
💡Government foresight
💡Bajaj Auto
💡Market penetration
💡First-mover advantage
💡Carbon emissions
💡Fuel efficiency
💡Retrofitting
💡Infrastructure
💡Environmental benefits
Highlights
The Indian government is bullish on alternative sources of fuel like green hydrogen, electric vehicles, and CNG to reduce carbon emissions and decrease dependence on crude oil.
India aims to not only reduce fuel imports but also become a fuel exporter, contributing to industries like buses, steel, and chemicals.
CNG (Compressed Natural Gas) is becoming a key fuel, with the share of CNG-powered vehicles increasing from 3.5% in 2019 to 11% in 2022, and expected to grow to 18% in the next 5 years.
Maruti Suzuki and Bajaj Auto dominate the CNG vehicle market in India with 75% and 79% market shares, respectively.
Bajaj Auto plans to launch the world's first CNG-powered motorcycle and is expanding its portfolio of CNG motorcycles by 2024.
CNG vehicles have a 45% lower fuel cost compared to petrol vehicles, offering significant savings for middle-class families.
In 1998, the Supreme Court of India ordered the implementation of CNG for all public transport in Delhi, sparking India's CNG revolution.
Bajaj Auto leveraged government foresight by introducing CNG three-wheelers in 1999, gaining a market advantage long before its competitors.
The CNG four-wheeler market is growing even faster, with a 32% increase in sales in 2023 compared to three-wheelers.
Maruti Suzuki is the market leader in CNG four-wheelers, holding a 75% market share, with Tata and Hyundai aggressively expanding in this space.
The CNG infrastructure in India is still underdeveloped, with only 6,088 CNG stations compared to 67,845 petrol and diesel stations, but the government plans to increase this to 17,700 by 2030.
There are business opportunities in setting up CNG stations and retrofitting petrol vehicles to run on CNG, a growing market due to high fuel costs.
By 2026, the world's first CNG terminal will be set up in Bhavnagar, Gujarat, which will store, compress, and distribute CNG across the country.
CNG motorcycles will have significantly lower running costs and carbon emissions compared to petrol motorcycles, with a mileage of 101.8 km per kg of CNG.
Bajaj Auto's success in the CNG market showcases the importance of understanding and capitalizing on government policies for long-term business growth.
Transcripts
hi everybody the Indian government has
been extremely bullish on Alternate
sources of petrol and diesel for a long
time now
especially green fuel electric vehicles
ethanol green
hydrogen pollution free or indigenous
crude oil prices keep fluctuating with
geopolitical tensions they are bleeding
our foreign exchange reserves and most
importantly they emit 12% of India's
energy related carbon emissions and this
is again causing both pollution and
global warming but this is where nitin
gari catalyzed the next big fuel
revolution in India and he is so
optimistic about this Vision that he
says that India will not just decrease
its Imports but it will also go on to
become an exporter of fuel to
theu buses steel
chemicals
and one of the most important
instruments of this massive Revolution
is a fuel that we all know as compressed
natural gas or
CNG now if you're a think school student
you know what this means right what is
the government the government is the
Godfather of the market and if the
Godfather is bullish on something then
it is pointing towards a million dooll
business opportunity in fact if you look
at the market reports the share of CG
powered vehicles has been increasing
from 3.5% of passenger vehicle sales in
2019 to 11% in 2022 and it is expected
to grow to 18% in the next 5 years and
you know what Bajaj Auto and maruti
Suzuki they've done such an incredible
job that today they have a market share
of 79% and 75% respectively and this
Market is moving so fast that maruti has
increased its CG sales by four times in
the last 6 years Tata Motors once to
make CNG sales equal to the EV sales and
recently if you saw Bajaj Auto is going
to launch the world's first CG power
motorcycle in India over the last few
quarters the company has said that it
would like to build a portfolio of CG
motorcycles for every motorcycle you'd
like to have a CNG vertical as well
within this calendar year 24 in the very
near future I think you will see us
announce the world's first CNG
motorcycle so ladies and gentlemen we
are witnessing not one not two but three
automobile revolutions together which
are EES hydrogen and now the CNG
Revolution so in today's case study
let's Deep dive and try to understand
why is CG considered to be the next
gamechanging fuel for India what has baj
Auto done so remarkable that it has now
become the market leader in this space
what is the Indian government doing to
boost the CNG industry in India and
lastly for people like you and me what
are the new opportunities in this
growing Market of
CG
before we move on previously we
discussed about tootsi which is an
Indian d2c brand and how they provide a
guaranteed and effective solution for
straightening crooked teeth or closing
gaps between teeth through their
invisible teeth aligners I got my atome
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uses the best-in-class technology to
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issues wearing these aligners for 22
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help you achieve perfectly aligned teeth
tootsi has designed over 2.5 lakh smiles
and their aligners are us FDA cleared
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or schedule a free at home scan using
the Tooty app or website these aligners
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traditional metal braces I always
emphasize on the significance of oral
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gapped teeth consider exploring tootsy
aligners start by booking a free teeth
scan and Doctor consultation using the
link in my description and you must
hurry because this free scan is only
available for the first thousand
individuals
Cho let's start from the basics and
understand what exactly is CNG and how
is it different from other fuels people
CNG is nothing but compressed natural
gas and it is extracted from the surface
of Earth just like Petroleum in fact it
is even found near the oil wells this
gas is then compressed to 1% of its
volume at standard atmospheric pressure
and then it is packed in cylinders these
cylinders are the cylinders that you see
in our cars and Ras now the reason why
CG is special is because it has three
major superpowers firstly CNG is an
environmentally friendly fuel so when an
IC vehicle runs on petrol it releases
various pollutin like nitrogen oxide and
carbon monoxide all these gases
contribute to the greenhouse effect
whereas when CNG Burns it majorly
releases only carbon dioxide and water
vapor and this CO2 emission is 10% lower
than diesel engines and 25% lower than
petrol engines second for every kilo of
CG it provides the same mileage or
perhaps more as compared to petrol so
for every kg of CG while a maruti Alto
800 can run for 31.5 km with a kg of
petrol it can run for
28.668150 see that is a 45% decrease in
cost of running and same is the case
with cars also if you drive a hybrid
maruti Alo and travel 2,000 km in a
month with a petrol cost of 10
16.31% L and 9,642 rupees in fuel cost
whereas with CG with a mileage of 31.5 n
km per kg it would cost you 63.3 1 kgs
and just
48115 6 rupees so CNG is almost 50%
cheaper than petrol and if a middle
class family uses a CG vehicle instead
of a petrol vehicle it can practically
save 50,000 Rupees every single year but
you know what guys in spite of all these
benefits until 1998 CNG was somehow not
seen as an alternate fuel at all and
this is when in 1998 the Supreme Court
of India made a major decision by by
ordering the government of Delhi to
implement CNG or LPG fuel for all autos
and for its entire bus fleet so this is
where India's CNG Revolution started now
you have seen me constantly say that the
government is the Godfather of the
market right so you as an entrepreneur
need to understand the foresight of The
Godfather so that you can go on to build
a million dooll business and you know
what Bajaj Auto is a classic example of
using this foresight to build a million
doll business because they built a
legendary business and left their
competition far far behind simply
because of the understanding of this
forsite so the question is how did Bajaj
Auto do this and what can we learn from
Bajaj Auto well as it turns out after
the supreme court order in 1998 many
companies ignored CNG and they thought
CNG will not be a big deal at all but
this is where baj Auto did something
absolutely magical back then Bajaj Auto
had been producing Ras for 40 long years
and after 1998 they came up and said if
the government is bullish then we need
to be bullish about CNG to during this
time their three wheelers were running
on petrol and they just begun diesel in
1997 but even then they made a sudden
shift and started working very hard to
produce the first cngg Auto Ria in India
and in just one year that is in 1999
Bajaj Auto launched their first CNG
three-wheeler in India and you know what
guys they were so early in this game
that by the time Mahindra and TVs
entered the CNG Market it was already
2001 until Mahindra Steed in and 2008
until TVs Steed in so by the time their
competition hit the market Bajaj was
already 2 years and 9 years into the
market respectively and if you look at
how much this first more Advantage
helped them you will know the importance
of understanding government policies in
2024 while 67% Auto Ras ran on CNG baj
Auto alone I repeat baj Auto alone had a
market share of
79% so Bajaj alone sold four times more
Autos than their next 10 competitors
combined while baj Auto sold 1.92 lakh
CG three-wheelers in f23 its remaining
competitors did sales of just
4838 units in total this is because
apart from the first more advantage over
the years Bajaj developed better
technical expertise they established
better relationships with the vendors
and they also built a super strong
distribution Network to give you an
example of the scale baj Auto has around
1,700 three-wheeler dealerships and
authorized service centers all across
the country and the second competitor in
terms of this network is piu and they
have 35% lesser Network footprint than
baj Auto so this is how by understanding
the foresight of the government baj Auto
won the CNG three-wheeler Market in
India now if you look at the CNG run
four-wheeler Market of India there is
again a a classic example look at this
chart the sales of CG three-wheelers was
2.41 lakh units in fi23 whereas for CG
four-wheelers the sales was 32% more at
3.18 lakh units so even though CG cars
were launched 11 years after rias the
CNG car market is now growing faster
than the three-wheeler Market this is
both because the four-wheeler Market is
much bigger and the adoption by the
middle class was very very quick this is
the reason why if you compare the CG
penetration in the total Market of
four-wheelers the penetration is still
very low at only 11% so this means there
is still a huge scope for CG vehicles
and CG infrastructure in the
four-wheeler Market of India and you
know who's the king of the CG Market in
the four-wheeler segment not so
surprisingly it is none other than
maruti Suzuki and they have a 75% market
share this is the reason why both tataa
and Hyundai they are very aggressively
expanded in their CNG portfolio in fact
Tata Motors is so bullish that they want
to make the CG penetration equal to the
EVs and by 2030 they wish to achieve 25%
market share in the CG market now
another reason why the CG Market is
growing so fast is also because of the
retrofitting Services Market in India in
simple words instead of buying a CG car
you can get a CG cylinder fit in your
petrol car and use both petrol and CG so
by investing 50,000 rupes a middle class
family can save 50,000 Rupees every
single year so you see this entire
retrofitting Market is creating a win
win win situation for all customers who
are fed up with high cost have a cheaper
option after retrofitting there is a
drastic boost in customers confidence
this boost in confidence is allowing
automakers to invest in R&D and
eventually the government is benefiting
with less inputs so this is the
trajectory of the three-wheeler and
four-wheeler Market of CG and like we
saw this month baj Auto took it to the
next level with the promise of taking CG
into the two-wheeler Market of India now
the reason why this announcement is a
very big deal is because this release of
the CG motorcycle could disrupt the
motorcycle sector of India for three
reasons firstly its carbon emissions
will be far lesser in spite of having
the same top speed as the gasoline
counterparts secondly the cost of
running the CG motorcycle is about 0.77
rupes per kilm as compared to around 1.5
to 1.6 rupes per Kil for petrol
motorcycles and thirdly the CG
motorcycle can travel about
101.8 km on 1 kg of CG and this is an
extraordinary mileage so not only is the
fuel cheaper it is also better for the
environment and considering the zero
emission Target of the government this
is a sector which will be pushed heavily
by the government because of which it
will become much easier for customers to
buy a CG bike and the companies to
manufacture and sell CG bikes in India
just like it happened for the EV market
so long story short just like baj
disrupted the three-wheeler Market in
1999 it is aiming to disrupt the
two-wheeler Market in the next 5 years
but now the question over here is baj
auto is a large company right so they
can capitalize on this wave very easily
but what can people like you and me do
to benefit from this CNG wave well for
that you need to have a look at this
chart in 2022 out of the 25 lakh petrol
passenger vehicles which which were sold
only 4.2 lakh were CG Vehicles now I
don't know if you noticed this but this
is a very rare site in India because a
product like CG vehicle is much more
economical as compared to a petrol
vehicle and yet it is somehow not sold
as much as petrol cars so if you see in
spite of India being a price sensitive
Market a product that is more cost
efficient is selling less and you know
why this is this is because India lacks
the CNG infrastructure if if you see the
number of petrol and diesel stations
there are a total of 67,8 45 stations in
the country but if you look at the
number of CG stations we have just 6,088
stations now I don't know how many of
you have seen this but then back in Pune
I have seen long lines of Ras waiting at
the CG stations and it is absolutely
ridiculous because they sometimes have
to wait for 3 to 4 hours so this is
happening because of an overflooding
demand for CG stations all across the
country this is the reason why the
government has set up an aggressive
Target to ramp up the number of CG
fueling stations from 688 to
17,700 stations by 2030 so if you want
to set up a CNG station there is a big
opportunity so do visit your State's
website for CNG dealership or land
leasing secondly in September 2018 the
Indian Ministry of Transport announced
that electric vehicles and CG Vehicles
will no longer require permits to
operate on roads these permits are for
commercial vehicles and also include
Goods carriers permit and cap permit so
if you start a fleet with CNG Vehicles
there is a good opportunity for
initiation and lastly the world's first
ever CG terminal will be set up in bav
nagar in Gujarat by
2026 this is essentially a place that
stores compresses and distributes only
CG so as these terminals are being built
across the country the scope and ease of
CNG stations will vastly increase in the
next 5 years so these are the
opportunities that are on the rise
because of the evolution of the CNG
Market in India and if you know more
such opportunities please drop a comment
and let the community know about the
same this is the story of CG in India
its biggest players the government
policies and the opportunities that lie
at your disposal and if I find more such
opportunities in this space I will
attach it in the description and Before
We Say Goodbye do not forget to visit
the tootsie website or download the
tootsie app to get your free invisible
teeth aligners and book your free teth
scan through the link in my description
that's all from my S today guys if you
learn something viable please make sure
to hit the like button in ut to make you
baba happy and for more such insightful
business and political case studies
please subscribe to our Channel thank
you so much for watching I will see you
in the next one
[Music]
[Music]
bye-bye
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