The CNG and LPG vehicle market has witnessed substantial growth over the past decade owing to the rising adoption of alternative fuel vehicles. CNG and LPG vehicles are more economical to fuel and emit lesser greenhouse gases as compared to gasoline or diesel vehicles. CNG is stored in high-pressure cylinders which allows vehicles to travel longer distances on a full tank as compared to LPG which is stored in liquid form under its vapor pressure at ambient temperatures. CNG vehicles offer savings of about 40-50% on fuel costs and reduce emissions by 20-30% compared to gasoline vehicles. Similarly, LPG vehicles provide savings of about 30-35% on fuel costs. Major automotive companies like Hyundai, Fiat, Honda, Suzuki, and others have expanded their CNG/LPG vehicle portfolio to cash in on the growing demand.

The Global CNG and LPG Vehicle Market is estimated to be valued at US$ 5.33 Bn in 2024 and is expected to exhibit a CAGR of 12% over the forecast period from 2024 to 2031.

Key Takeaways

Key players: Key players operating in the CNG and LPG vehicle market are HYUNDAI MOTOR GROUP, Fiat Chrysler Automobiles, Honda Motor Co. Ltd., Suzuki Motor Corporation, General Motors, Groupe Renault, Tata Sons Private Limited, Landi Renzo S.p.a., Volkswagen AG, AC S.A., Nissan, Navistar Inc., Ford Motor Company, KION GROUP AG, and AB Volvo.

Key opportunities: Growing demand for eco-friendly vehicles, rise in oil prices, and government initiatives like subsidies are driving the sales of CNG and LPG vehicles in both developed and developing regions. Conversion of existing vehicles into CNG/LPG models also presents significant growth opportunities.

Technological advancements: Automakers are focusing on developing improved fuel storage systems, boosted engines, and electronic fuel injection systems to enhance the performance and mileage of CNG/LPG vehicles. Dual-fuel technology allows vehicles to switch between CNG/LPG and gasoline/diesel is gaining traction.

Market drivers: Stringent emission norms by governments across the globe aimed at curbing air pollution are a key factor boosting the demand for CNG and LPG vehicles. Rising fuel prices also encourage consumers to switch to economical CNG/LPG models. Growing focus on reducing reliance on crude oil imports by countries further accelerates the sales of alternative fuel vehicles.

Current challenges in CNG And LPG Vehicle Market:

The CNG And LPG Vehicles Market Size is currently facing several challenges which hinders its growth. The major challenges include lack of adequate fueling infrastructure across most regions, higher upfront costs of these vehicles compared to conventional vehicles, perception of lower driving range among consumers. The development of fuelling infrastructure has not kept pace with increasing demand for such vehicles. Also, pricing volatility of natural gas in international markets affects profitability and return on investments for setting up new CNG fuelling stations.

SWOT Analysis

Strength: Lower running costs compared to petrol and diesel vehicles. Also, more environment friendly fuels with lower emissions.

Weakness: Higher upfront costs for conversion or buying new CNG/LPG vehicles. Lack of adequate fuelling stations in many areas which limits driving range.

Opportunity: Increasing government support through policies and incentives which is promoting adoption. Rapid growth in shared mobility sector provides opportunities to replace fleets with greener CNG/LPG vehicles.

Threats: Volatility in international natural gas prices can increase domestic CNG prices unpredictably affecting demand. Electric vehicles emerging as stronger green alternative with improving driving range and falling costs.

Geographically, the market is currently concentrated in Asia Pacific region led by strong presence in India and Pakistan. India has the largest CNG vehicle fleet in the world owing to attractive incentives and purposeful development of CNG fueling stations across major cities.

The fastest growing regional market is expected to be North America from 2024 to 2031. Both the US and Canada are promoting use of natural gas vehicles through various incentive schemes for commercial fleet operators. Conversion of fleets to CNG provides an economically viable option to reduce costs as well as carbon footprint. Government’s focus on energy security is also driving the adoption of domestic natural gas.

*Note:
1.  Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it