The small car segment in India has been steadily shrinking over the years, with its market share dropping from 27.6% in FY24 to 23.2% this year. Despite this downward trend, Hyundai Motor India remains committed to the segment, particularly through its CNG offerings, which are seeing strong demand among first-time buyers and fleet operators.
CNG as a Growth Driver
Tarun Garg, COO of Hyundai Motor India, acknowledged the segment’s ongoing decline but emphasized its continued relevance. “Every year, we think it has reached the bottom, but it keeps finding a new low,” he said during Hyundai’s Q3 FY25 press conference. However, he highlighted that small cars are crucial not only for affordability but also for meeting Corporate Average Fuel Economy (CAFE) regulations.
Hyundai’s CNG portfolio, including the Grand i10 Nios, Aura, and Exter, has been gaining traction. “The dual-cylinder setup in the Nios CNG has been a game-changer, driving strong sales,” Garg noted. In 2024, Hyundai recorded its highest-ever CNG contribution at 13.1%.
Sales figures underscore this momentum. The Grand i10 Nios CNG saw its share rise from 16% in Q1 to 20.3% in Q3, while the Aura CNG surged from 86.5% in Q1 to 92% in Q3. Hyundai has also been strengthening its rural footprint, with Garg predicting further growth in CNG adoption.
Shifting Consumer Preferences
Despite Hyundai’s push for CNG, the company’s small car penetration has dipped—from 22.9% in FY24 to 20.2% between April and December this year. Garg attributes this shift to evolving consumer preferences. “Customers today have higher purchasing power and aspirations. They are unwilling to compromise on comfort and convenience,” he explained.
While small cars face mounting challenges, Hyundai’s focus on CNG technology and regulatory compliance keeps the segment relevant, positioning the brand to navigate this evolving landscape.
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