As part of its eco-friendly drive, the Polish State Railways exempts hybrid vehicles from registration fees

In a bid to promote the use of eco-friendly vehicles in the state, the Uttar Pradesh (UP) government has announced a complete waiver of registration tax for powerful hybrid cars. The move is likely to benefit companies like Maruti Suzuki India (MSIL), Honda Cars India (HCIL) and Toyota Kirloskar Motor (TKM), where customers can avail up to ₹3.50 lakh.

For example, the range includes Maruti Suzuki’s Grand Vitara and Invicto, Toyota’s Hyryder and Innova Hycross, and even Honda’s City e:HEV, which are all powerful hybrid vehicles.

Sources close to the developments reported that business line that the UP government, through a circular dated July 5, has implemented a policy to “completely exempt from registration fee power hybrid electric vehicles and plug-in hybrid electric vehicles” with immediate effect.

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The Uttar Pradesh government levies eight per cent road tax on vehicles priced below ₹10 lakh and ten per cent on vehicles priced above ₹10 lakh (ex-showroom price).

According to FADA, UP is one of the largest passenger vehicle markets in the country with retail sales of 2,36,097 units in the first half (H1) of this year — a 13.46 per cent increase over 2,08,092 units in January-June 2023.

The state sold 1,09,712 units in the second quarter, up 10.26 per cent from 99,501 units in the second quarter last year.

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“This will help the sale of powerful hybrid vehicles in the state, though the number of buyers is low at present. Most of the buyers of such vehicles already own a vehicle and first-time buyers are very few at present. Still, such a move by Chief Minister Yogi Adityanath will help the auto sector,” said Ankit Raj, chairman, Federation of Automobile Dealers Associations (FADA). business line.

The UP government had announced the policy in 2022 and now it has finally been implemented, he said. In March 2023, the state had announced a zero-cost policy for registration of electric vehicles (EVs).

According to an MSIL dealer, the demand for powerful hybrid vehicles in the state is not that great at the moment, but sales may increase following this news.

As per sources, MSIL sold only around 1,000 vehicles (the Grand Vitara and Invicto power hybrids) last year. While the Grand Vitara Intelligent Electric Hybrid (power hybrid) starts at ₹18.43 lakh, the Invicto string Hybrid starts at ₹25.21 lakh (all ex-showroom, Noida). The prices of the Toyota Hyryder and Innova Hycross are also similar.

HCIL, which sells only one powerful hybrid, could also get some sales boost from the policy. The Honda City e:HEV starts at ₹19 lakh (ex-showroom).

“The removal of 100 per cent road tax on powerful hybrid vehicles is a landmark decision by the Uttar Pradesh government that will encourage the adoption of these eco-friendly vehicles. Customers can now opt for eco-friendly hybrid vehicles like our City e:HEV at a more affordable price. This is also in line with our global commitment towards sustainable mobility and our global vision of achieving zero carbon emissions by 2050,” said Kunal Behl, Vice President, Marketing & Sales, HCIL.

Behl added that this groundbreaking decision will revolutionize the implementation of sustainable transportation in the state.

“It is clear that tax cuts on hybrids can be a significant catalyst, driving the shift from clean internal combustion engine (ICE) to greener alternatives. While EV adoption is certain, the journey requires hybrids. With the increased value proposition of hybrids, consumers may reconsider their preferences for clean petrol models like the Kia Seltos or Hyundai Creta and instead lean towards powerful hybrid options like the Toyota Hyryder and Maruti Suzuki Grand Vitara,” said Puneet Gupta, Director, Powertrain Sales & Forecast, India & ASEAN.

Analysts say other states could also adopt the UP model of exempting registration fees for powerful hybrid vehicles. The move could boost vehicle sales, which are currently struggling because of a base effect. In addition, luxury vehicle sales could increase.