Maruti, Toyota launch aggressive strategies

Uttar Pradesh’s tax break on hybrid vehicles appears to be an experiment that, if successful, could be implemented in other states as well.

To ensure rapid adoption of electric vehicles, both the central and state governments are providing subsidies for electric vehicles. In Uttar Pradesh, users can now also save on hybrid vehicles by opting for powerful hybrid models from Maruti and Toyota.

Inquiries for hybrid vehicles nearly doubled

Uttar Pradesh is one of the largest car markets in India due to its size and large population. The Uttar Pradesh government has been actively promoting the state’s economy and is keen on implementing new ideas. Therefore, the decision to introduce tax breaks for hybrid cars starts to make sense. It seems that Maruti and Toyota have lobbied for tax breaks for hybrid cars and their proposal has been accepted.

The tax relief on hybrid cars has started yielding the desired results. This is evidenced by the growing interest among consumers in hybrid cars. According to dealers, enquiries for hybrid cars have increased significantly in recent weeks. The savings can be substantial through the tax relief scheme. For example, the actual cost of a Camry sedan can be reduced by around Rs 4.32 lakh. Similarly, those who buy a Toyota Vellfire in Uttar Pradesh can save around Rs 1.31 lakh. Other powerful hybrid models from Maruti and Toyota also enjoy similar savings.

Opposition from pure electric vehicle manufacturers

Interestingly, the decision to incentivize the sales of hybrid vehicles is facing resistance from OEMs such as Mahindra, Tata Motors and Hyundai. These brands have expressed concerns that such incentives for hybrid vehicles will adversely affect the sales of pure electric vehicles. They have lobbied to overturn the decision of the Uttar Pradesh government, but their efforts seem to have been unsuccessful. If other states also start offering incentives for hybrid vehicles, it will pose a major challenge to electric vehicle manufacturers.

Many OEMs envision a pure electric vehicle ecosystem in the future and have invested heavily in developing their electric vehicle portfolios. Government subsidies have played a key role in incentivizing people to switch to electric vehicles. If hybrid vehicles also start to receive incentives across the country, it could lead to slow or even negative growth in electric vehicles.

Maruti and Toyota set aggressive sales targets

As Maruti and Toyota appear to have been lobbying hard for tax breaks on hybrid cars, they have set strict sales targets for dealers. One dealer reported that they were asked to sell at least 250 cars per month. To achieve this target, dealers have increased their focus on hybrid car sales. Customers are being asked to speed up their purchasing decisions as there is no certainty as to how long the tax break scheme will last.

In the green fuel space, electric cars were the second vehicle to be launched in India after CNG. This was followed by the strong hybrid cars. Brands like Toyota believe that hybrid cars are better than pure electric cars. The main reason is the problem of charging electric cars and the high entry cost of pure electric cars. Hybrid cars are less polluting and have a better driving range. With support from both sides, the Indian automobile industry seems to be heading towards an electric car vs hybrid car battle in the future.

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