UP’s new move to waive off registration taxes for Hybrids has sparked a conflict between electric carmakers and hybrid manufacturers, which the government will meet on Sunday to sort out differences. All passenger carmakers will attend the meeting, and they are separated by the type of vehicles they make.
Hyundai, Tata Motors, and Mahindra focus on EVs, while Maruti Suzuki, Honda, and Toyota make hybrids. With the waiver in registration tax for hybrids, the former camp is opposing the move. Reports suggest that carmakers from the former camp, those who make EVs, are against the decision because the sales of diesel vehicles may take a hit.
Can hybrid vehicles cannibalise diesel sales?
Hyundai, Tata Motors, Mahindra, and Kia are strong players in the diesel segment, while Honda, Toyota, and Maruti Suzuki do not have diesel offerings in India. If the tax is waived, hybrid vehicles will cost around the same as diesel vehicles and this can lead to a decline in sales for the carmakers.
Toyota does make diesel vehicles such as the Fortuner, Hilux, and Innova, however, despite the tax waiver, it will not cannibalise sales since the Innova Crysta has a market in the commercial space, while the Fortuner is a premium vehicle and the Hilux is a lifestyle choice.
That said, the bigger concern for carmakers is that if UP goes ahead with the tax waiver, neighbouring states will soon follow, further hurting sales of vehicles. UP is one of the largest regions for PV sales in India and in the first half of 2024, 2,30,000 units were sold, a 13 percent YoY increase.
Currently, electric vehicles attract 5 percent GST with no additional cess, while hybrids attract 28 percent GST and added taxes that take it to 43 percent tax in total.
