Is India becoming a multi-fuel car market?

Recently, Business Standard highlighted an interesting shift in FADA’s August car sales data. For the first time, CNG, hybrid and electric cars together accounted for a larger share of passenger vehicle sales than petrol cars.

In August, these alternative-fuel vehicles made up 41.95% of sales, compared with petrol's 40.85%, according to FADA.

You might read that and think: India is finally becoming an EV market.

But not quite. Of every four passenger vehicles sold in India that month, roughly one was running on CNG. CNG alone had reached 25.28% of the market. EVs were still at 7.63%, while hybrids accounted for 9.04%.

Image Source: Autocar India

So if petrol is losing its grip, there isn't one obvious winner taking its place.

CNG quietly got good

For years, the CNG proposition came with a fairly annoying catch. Yes, you could save money on fuel. But first, you needed a filling station somewhere reasonably close.

That has become much less of a problem. India had only 1,424 CNG stations in FY18. By FY24, that network had grown to 6,456, according to the Petroleum and Natural Gas Regulatory Board. The number of CNG vehicles on Indian roads rose from 58.61 lakh in March 2023 to 81.95 lakh by March 2025.

More pumps made CNG practical in many more places. Carmakers followed with factory-fitted versions of everyday cars, taking CNG beyond its old taxi-heavy image.

And the selling point isn't difficult to understand. CNG cars generally cost more than the equivalent petrol model, but the fuel can be cheaper to run. If you're driving to work every day, doing long distances or simply hate watching the fuel bill climb, that calculation starts working in CNG's favour.

Buyers seem to have noticed.

By July 2026, CNG had already overtaken petrol in passenger vehicle sales in Gujarat, Haryana, Maharashtra, Rajasthan and Uttar Pradesh.

The rest of India was catching up.

Petrol still accounted for more than half of passenger vehicle sales in August 2024. Two years later, its share is down to 40.85%. That decline hasn't come from one fuel suddenly taking over. CNG has gained steadily, EVs have grown from a much smaller base, while hybrids have stayed broadly flat.

There is also a change in how people are buying cars. Petrol used to be the safe default for most private buyers. Now running costs, charging access, daily commute and even where you live can push the decision in a different direction. Petrol is now competing with a much wider set of alternatives, each solving a different problem for the buyer.

What about EVs?

They are growing. Just not evenly.

Electric cars have more than tripled their share of passenger vehicle sales in two years, but they still make up less than 8% of the market. Look at other vehicles and the picture changes completely.

Electric two-wheelers accounted for 10.68% of two-wheeler sales in August. EVs made up 5.18% of commercial vehicle sales. And in three-wheelers, electric penetration had already reached 65.3%.

Basically, converting an auto-rickshaw or delivery scooter market to electric is proving very different from convincing a family to make its ₹10 lakh or ₹15 lakh car an EV.

With a car, the checklist gets longer. Can you charge at home? How far do you drive? What about highway trips? Is an EV worth the higher upfront cost? And what happens when you eventually want to sell it?

For some buyers, those answers work.

For others, CNG makes more sense. Or a hybrid. Or good old petrol.

E20 added another complication

Petrol has also been going through its own transition. India started experimenting with ethanol-blended petrol more than two decades ago. A pilot began in 2001, E5 followed in 2006, and the government later pushed towards 20% ethanol blending, bringing its original 2030 target forward to the 2025-26 ethanol supply year.

That is how E20, petrol blended with 20% ethanol, became widely available. It also triggered plenty of confusion.

Owners of older petrol vehicles have raised concerns around mileage and compatibility, and some of that hesitation is pushing buyers towards CNG, hybrids and EVs.

ARAI has said E20-compatible vehicles undergo extensive durability and performance testing. The petroleum ministry has also said there is no verified evidence of widespread engine failures caused by ethanol blending.

Petrol was losing share before the current E20 debate became this noisy anyway. CNG stations had been multiplying, EV choices were improving and manufacturers were already giving customers more ways to avoid petrol.

E20 may have added one more reason to compare.

Choosing a car got complicated

Picture someone walking into a showroom today. A petrol car might be cheaper upfront. The CNG version could save money if they drive a lot. An EV could slash running costs if they can charge it at home. A hybrid offers better fuel efficiency without needing a charger. And diesel is still hanging around, with roughly 17% of passenger vehicle sales in August.

There could soon be another option too. In June, the government launched what it described as India's first flex-fuel passenger vehicle from Maruti Suzuki, capable of running on ethanol blends ranging from E20 to E100. That isn't going to transform the market tomorrow. But the menu is getting rather crowded.

Carmakers have to pick several horses

This makes the transition awkward for car companies too. There is no single technology they can safely bet everything on.

Maruti Suzuki has built a large CNG portfolio and is also backing hybrids. Tata Motors and Mahindra have pushed heavily into electric cars. Toyota continues to build around hybrids. Petrol remains a huge business. Diesel hasn't disappeared either.

And each fuel appeals to a slightly different Indian buyer.

Someone driving 50 km every day may obsess over running costs. Someone living in an apartment without reliable charging probably won't find an EV particularly convenient. A family making occasional highway trips may value range more than fuel savings.

That is why India's transition doesn't look like petrol today, EV tomorrow.

So, is petrol dying?

No.

Petrol still accounted for 40.85% of passenger vehicle sales in August, making it India's largest individual fuel type by a comfortable margin.

CNG was at 25.28%. Hybrids were at 9.04%. EVs were at 7.63%. None has replaced petrol by itself.

What changed is that all of them together finally became bigger than petrol.

That may be a better way to understand where India's car market is heading. We could spend years with petrol, CNG, diesel, hybrids and EVs sitting next to each other in the same showroom, each making sense to a different buyer.

Petrol is still the most popular choice. It's just no longer the only obvious one.

Sources