According to foreign media reports, Uttar Pradesh, India, announced that it will waive some taxes and fees on hybrid vehicles, which will reduce the price of hybrid vehicles by 10%. This marks a resounding victory for Toyota in lobbying efforts and raises industry and analyst expectations that other states may follow suit.
As the most populous state in India, the Uttar Pradesh government announced on July 5th that, like electric vehicles, the state will also exempt some hybrid vehicles from registration tax. Hybrid vehicles use both electric motors and internal combustion engines, which can save fuel.
Maruti Suzuki is the largest automobile manufacturer in India and collaborates with Toyota to produce and sell hybrid vehicles. Since the local media first reported on the notice from Uttar Pradesh, Maruti Suzuki's stock price has surged by 5.5%. It is reported that Uttar Pradesh accounts for 10% of India's total car sales.
With its best-selling Hycross and Hyryder SUVs, Toyota holds an 85% market share in the Indian hybrid vehicle market, making it likely to be the main beneficiary of this initiative, followed by Maruti Suzuki. Toyota and Maruti Suzuki did not respond to requests for comment from foreign media.
The tax exemption policy in Uttar Pradesh applies to so-called strong hybrid vehicles (which can run on an electric motor for a period of time) and plug-in hybrid vehicles.
The government under Indian Prime Minister Narendra Modi has focused on promoting environmentally friendly transportation by offering millions of dollars in incentives to companies producing electric vehicles, but has not given any discounts to hybrid vehicles.
India's federal sales tax on electric vehicles is only 5%, while the tax rate on hybrid vehicles is as high as 43%, close to the 48% levied on gasoline vehicles. Each state will also independently levy registration taxes, which further increases the overall cost of purchasing cars.
As the world's best-selling automaker, Toyota has long lobbied the Modi government to reduce taxes on hybrid cars. The company believes that hybrid cars are less polluting than gasoline cars, but has received little policy support.
Honda is also selling a hybrid version of its popular Fengfan (City) sedan in India, and the company stated that this decision will undoubtedly attract more customers to join India's environmental transportation mission.