CNG AND LPG VEHICLE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

CNG And LPG Vehicle Market Size and Trends

The CNG and LPG vehicle market is estimated to be valued at USD 5.33 Bn in 2024 and is expected to reach USD 12.11 Bn by 2031, growing at a compound annual growth rate (CAGR) of 12.4% from 2024 to 2031.

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The market is expected to witness significant growth during the forecast period. Stringent emission norms by governments across the globe regarding vehicular emissions and rising fuel prices are encouraging consumers to switch to cheaper and cleaner alternatives such as Compressed natural gas (CNG) and Liquefied petroleum gas (LPG). Also, incentives by various governments for the adoption of CNG/LPG vehicles along with growing focus of auto makers on introducing new CNG/LPG variants of their popular vehicles are some of the key factors that are anticipated to drive the demand for CNG and LPG vehicles in the coming years. However, high investment cost for the conversion of vehicles and lack of fuelling infrastructure may hinder the market growth to some extent.

Favorable Government Policies and Subsidies

Favorable government policies and initiatives taken by the government to promote CNG and LPG vehicles have been major drivers for the growth of the market. Many countries across the globe are putting stringent norms on carbon emission from vehicles to curb the rising pollution levels. At the same time, the depleting crude oil reserves and fluctuation in crude oil prices makes these countries explore alternate fuel options. It is here that the governments see CNG and LPG as viable clean green fuel alternatives to gasoline and diesel.

For instance, over the past few years, governments have introduced various schemes to make CNG and LPG vehicles more affordable for the common man and also incentivize their adoption. Many nations offer sizable subsidies on the purchase of new CNG/LPG vehicles. For example, the Indian government provides a subsidy of USD 181-362 per CNG vehicle depending on the vehicle type. Such subsidies have made CNG cars more affordable and appealing for many lower-middle class families. Some countries also give tax rebates and lower road tax for CNG/LPG cars.

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Air pollution has become a major concern around the world with cities witnessing alarming levels of toxic emissions in the air. The transportation sector is identified as one of the major contributors to this problem, especially vehicles powered by gasoline and diesel.

Moreover, the demand for vehicles running on alternative fuels is rising due to strict emission regulations, higher fuel costs, and increased customer awareness. In 2021, the sales of Compressed Natural Gas (CNG) vehicles in India surged to 163,696 units, a significant jump from 41,572 units in 2020.

As per the International Monetary Fund (IMF), oil prices increased by 12% in 2021 compared to the previous year. This uptick was driven by the growing demand for oil as countries reopened and their economies began recovering from the impact of the receding COVID-19 pandemic.