What is the value of CNG bikes vs EV and ICE models? Rakesh Sharma of Bajaj Auto answers

Rakesh SharmaED, Bajaj Auto, explains the rationale behind launching CNG motorcycles. He says the company expects this to be a key point in the growth of the two-wheeler industry in the country. And if we are to take the government at face value, which there is no reason to distrust, the CNG network will grow even faster and faster, with 100 new pumps being added every month. That means CNG will be universally available. At this time, their estimate is only 60%, but it will go up to 80%.

Let’s start with this CNG bike launch. What is the value of this model versus EV and ICE models?
Rakesh Sharma: Well, for the full lowdown you have to come to Pune on the 5th; By 2 pm we will unveil the new bike. For now, suffice it to say that it is the result of very intense exercise over the past two-three years. We will thereby showcase the power of innovation at Bajaj Auto. It addresses a very large market size. About 70% of the 1 million monthly motorcycle market has some level of sensitivity to fuel economy.

Our whole effort was that we have to make a significant difference. Otherwise, the incremental difference we are trying to make gives us a marginal benefit. People don’t migrate for incremental differences and that’s where our experience with CNG over the past 20 years by three-wheelers comes into play. We were the first to launch a three-wheeler based on CNG fuel, RE. So it cuts fuel costs that are in the top three or four household expenses by about 50%; That’s a significant savings.

Every month Rs. 30,000 to Rs. 40,000 earning a very average customer per month around Rs. 1,500 can expect savings based on the tried. Secondly, with all the emphasis of the government and also companies on decarbonisation, CNG, while still a carbon-based fuel, has a much lower carbon content, and to that extent, is more beneficial from an environmental point of view. Let’s say diesel or petrol, especially in carbon based emissions. Therefore, it has reduced significantly.

Thirdly, we found that we were doing this in parallel, a huge and brilliant effort by the Ministry of Petroleum and Natural Gas, Government of India, to run the CNG network, which has been very successful. And in fact, our three-wheeler business is riding on it. Today, about 70% of the districts in India are covered by the CNG network. All the gas distribution companies are looking for increased throughput so that they can get a good return on their capital expenditure and that is where there is a coincidence, but very, I mean, providential, but very good alignment with the government pressure.

While we were doing this, we thought, let’s look at what the comfort needs are, what the ergonomics are, how people and passengers ride, and let’s bring it. All this is packed together in this new bike and all with a 50% reduction in fuel consumption.

A few years back, when one of the passenger car manufacturers first went ahead and launched CNG, a large segment of the passenger vehicle market shifted to CNG, be it commercial terms, taxi usage and many others. Could this be too big a shift to the extent that some of your products can be cannibalized? Does it still make business sense for you in the grand scheme of things on the volumes and profitability front?

Rakesh Sharma: Yes, you are right, our expectation or expectation is that this can be a major point in the development of two-wheeler industry in the country. And if we are to take the government’s programs at their face value, which I have no reason to disbelieve, which is that the network will grow even more and faster, with 100 new pumps being added every month, so that means CNG will be universally available.

At this point, our estimate is only 60%, but it will go up to 80%. So, you can see that 70% of the 1 million people are at some level, fuel-efficiency sensitive and about 70% of India’s market will be covered. And it can release this transition. But having said that, the key issue in this is the change in consumer behavior, that’s what we have to look at. Because now the customer has to go to a different petrol pump, the customer has to get used to a different type of fuel and refueling etc., therefore, the distribution companies also have to respond a lot. This market grows.

So, that’s the part we’re finally looking forward to. But I don’t doubt that over a period of time, it’s only the slope that one is concerned about, but after a while there will be a significant change. Because it is Rs 1,500 per month for a person in that category. We have seen this happen in three-wheelers. For a long time, we butted our heads against diesel three-wheelers, where we had an unfavorable competitive ratio, but we could not succeed, we would not get a dealership in Bihar.

But the moment the CNG pump got there and people saw that Bajaj CNG was better, we were flooded with inquiries for dealerships, as people were migrating from diesel to CNG. After all, they were saving Rs 1,000-2,000 every month. Of course, it is a commercial category. We have seen this happen in electric vehicles too, where there are many concerns – about charging, range, battery etc. But daylight saving is such a powerful magnet that despite all these questions, people are switching from ICE vehicles to electric. Any pointers on where I will charge it? What will happen to the battery? Is it safe and all that?

So, it’s a very powerful proposition, coupled with the fact that it’s not going to be an apologetic vehicle, it’s going to be a vehicle whose style and design will stand on its own and have all the education. What it takes to make the ride comfortable for a small town guy and someone with that riding habit of the last decade. So, I think it could be a pivotal moment, but we have to wait and see how consumers respond to this behavioral change in terms of visiting different petrol pumps and refueling patterns and all that.

What about the next five years? Do you have plans to export CNG bikes?
Rakesh Sharma: India is unique in terms of CNG penetration. It is without parallel. There are some countries like Bangladesh, Egypt and Tanzania where you get excellent CNG network, but not outside of Dar es Salaam. Then there’s Peru, a little bit in Argentina too. So, there are about half a dozen countries that could be immediate candidates. Besides that, Nigeria has started with CNG, but we have to see how their CNG distribution plan pans out in the next five years. At this time, about six countries can receive the product.

Anything on CNG Motorcycles you would like to share with regards to the name? Rumor has it that it will be called Bruiser. Is that true?
Rakesh Sharma: Well, it’s hard for me to say anything on that, because it will take the thunder away on launch day. But Bruiser was the code name and I can tell you that it wasn’t going to be Bruiser. A brand name is something else. It is an exciting brand name. And it will be something else. This is a bike, which has got a very stand-on style. And then it’s got biofuel capability in the sense that it has both CNG and petrol so that brings a huge amount of assurance.

Secondly, it also increases its range. With a full tank of CNG and a full tank of petrol, you can ride very long distances. It takes care of many ergonomics and comfort issues. We will start with one or two products, but depending on how this is received, the pace at which it is being received, we intend to expand the portfolio and we are also happy that Mr. Gadkari will be there at the launch, Because he has been a champion for alternative fuels and decarbonisation and environmental sensitivity and we are glad he will be there at the launch. So that’s all I can say right now without taking away the thunder.