1. Despite GST, Maruti Suzuki to continue investing in home grown semi-hybrid tech in its Ciaz, Ertiga variants

Despite GST, Maruti Suzuki to continue investing in home grown semi-hybrid tech in its Ciaz, Ertiga variants

At a time when most automakers in India have moved away from introducing cars with the hybrid technology owing to the significant increase in taxes after the implementation of the goods and services tax, Maruti Suzuki will continue to invest in its homegrown semi-hybrid technology it dubs smart hybrid across its Ciaz (a mid-size sedan) and Ertiga (an MUV) variants.

By: | New Delhi | Published: November 4, 2017 5:48 AM
maruti suzuki, maruti suzuki business, gst impact on maruti suzuki Maruti and M&M are the only carmakers in the domestic market to introduce the quasi-hybrid technology.

At a time when most automakers in India have moved away from introducing cars with the hybrid technology owing to the significant increase in taxes after the implementation of the goods and services tax, Maruti Suzuki will continue to invest in its homegrown semi-hybrid technology it dubs smart hybrid across its Ciaz (a mid-size sedan) and Ertiga (an MUV) variants. “Maruti as a company will continue to invest in smart hybrid technology since it is much more cleaner in terms of emissions. Customers who buy vehicles with hybrid engines also understand that. Hence, we will continue to invest,” said RC Bhargava, chairman of Maruti Suzuki. Toyota Kirloskar recently announced that it had stopped manufacturing the hybrid variant of Camry (a premium sedan) for the domestic market. Demand for hybrid vehicles has substantially declined after the Centre removed the subsidy on such vehicles under the FAME scheme. After the implementation of the GST, taxes on such vehicles increased from 28% to 43%. The government has refused to make exceptions for hybrid vehicles, and instead, is trying to promote electric vehicles. After the introduction of the mild hybrid technology, sales of Maruti’s dual offerings – Ciaz and Ertiga – zoomed since they attracted just 12.5% excise duty (in the pre-GST era) compared to its peers that attracted a 28% excise duty.

Maruti and M&M are the only carmakers in the domestic market to introduce the quasi-hybrid technology. Other manufactures also planned to introduce cars with hybrid engines but most of them shelved their plans after taxes were hiked.

“The implementation of the GST has discouraged purchase of hybrid vehicles among car buyers. For instance, while about 70% of the total Ciaz’s sales used to come from the hybrid variant, it has come down to a mere 32% after the GST. Meanwhile, sales of the hybrid variant of Ertiga came down to 50% from 70% earlier,” said Ajay Seth, chief financial officer, Maruti Suzuki, in a conference call with analysts.

After commissioning of Suzuki’s new lithium-ion battery manufacturing plant in Gujarat, costs of manufacturing hybrid vehicles will come down further, which will help Maruti. The company is expected to launch the hybrid version of the popular hatchback Swift in the domestic market before the end of the current fiscal.

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