Alternative-Fuel Car Sales in India Top Petrol on Cost, E20 Concerns, Says Dealers' Body

Sales of alternative-fuel passenger vehicles outpaced petrol-powered cars in India in August for the first time, an auto dealers' body said on Monday, as the Middle ‌East war raised oil prices and a public backlash against higher-ethanol-content fuel simmered.

Alternative-fuel models, including compressed natural gas, hybrid and electric models, accounted for nearly 42% of passenger-vehicle sales, while petrol vehicles stood at about 41%, according to the Federation of Automobile Dealers Associations (FADA), which represents dealers of major car and two-wheeler makers.

"This shift ⁠was bound to happen," Sai Giridhar, FADA vice president, told Reuters.

While E20-related concerns may have initially accelerated buyers' move away from petrol, the trend was being sustained by a wider choice of alternative-fuel models, improved EV range and a gradual expansion of charging infrastructure, he said.

The world's third-largest car market's transition to E20 petrol, which contains 20% ethanol, from E10 is aimed at reducing reliance on imported crude but has drawn criticism from owners of older vehicles, who are concerned that the blend could reduce fuel economy.

The ‌government ⁠earlier dismissed the backlash, calling it "wild claims" and asking people to not "fall for the rage bait".

India's automobile retail sales rose 17.5% year-on-year in August to 2.4 million, a record for the month.

This was despite leading auto companies rolling out price hikes this year to cope with ⁠elevated input costs.

Giridhar, however, warned that further price hikes risked eroding gains from last year's tax reforms introduced to fuel consumption.

The country's largest carmaker, Maruti Suzuki India on Monday said it will raise ⁠prices of select models by up to 20,000 rupees ($211.80) from September, its third hike since May.

India is heading into its annual festive season, a period that typically spurs ⁠big-ticket purchases.

Giridhar said despite inflationary pressures and price increases, dealers remain optimistic about sales.

Passenger-vehicle inventory increased by five days from end-July levels to about 38–40 days, FADA said.