Strong hybrid car sales in UP take off after registration tax waiver

The data revealed that the share of strong hybrid vehicles in total car sales in UP grew from 1.2 per cent in June to 3.3 per cent by August

Monthly sales of strong hybrid cars in Uttar Pradesh have more than doubled following the state government’s decision to scrap the registration tax on such vehicles from July 5. Electric car sales in the state, in contrast, have stayed largely flat.

According to data from Jato Dynamics, monthly electric car sales in UP were 413, 496, 355, 430, and 387 units between April and August. But strong hybrid car sales jumped from 228, 239, and 390 units in April, May, and June to 895 in July and 996 in August. 

When contacted, Maruti Suzuki India (MSIL) and Honda Cars India (HCIL) — two of the three leading players in the strong hybrid market — expressed satisfaction with the jump in strong hybrid cars sales in India’s most populous state in the past two months, while Tata Motors, India's preeminent electric car manufacturer, and Kia India indicated their disappointment.

Rahul Bharti, executive director of corporate affairs at Maruti Suzuki, welcomed the UP government’s decision to “recognise the importance” of strong hybrid vehicles in achieving national goals of reducing carbon emissions, as well as curbing oil imports.

“Customers in UP have responded positively. It is good to see that the combined penetration of BEVs (battery electric vehicles) and SHEVs (strong hybrid electric vehicles) reached 4.6 per cent in UP, slightly surpassing the national average for August. Several states are encouraging hybrid technology, along with EVs… (which) will lead to faster adoption of environment friendly technologies,” Bharti said.

The data, reviewed by Business Standard,  revealed that the share of strong hybrid vehicles in total car sales in UP grew from 1.2 per cent in June to 3.3 per cent by August. The UP government’s decision to waive the 8-10 per cent registration tax on strong and plug-in hybrid vehicles reduced the on-road price of these cars by up to Rs 4 lakh.

Kunal Behl, vice-president of marketing and sales at HCIL, told Business Standard that the registration tax waiver significantly boosted the affordability of hybrids, drawing in a larger customer base for these “environmentally friendly” vehicles.

“At Honda, we offer advanced hybrid technology in our Honda City e:HEV. Sales of the City e:HEV nearly doubled (in India) in July compared to June; this momentum continued into August with a notable increase in enquiries and showroom walk-ins. In 2023, the City e:HEV made up 11 per cent of our total City sales; this year, it has risen to 14 per cent,” Behl noted. He further emphasised that favourable tax policies and reduced duties could accelerate the adoption of hybrid vehicles.

However, Tata Motors, Hyundai Motor India, Kia India, and Mahindra & Mahindra had opposed the July 5 order during a meeting with the UP government last month, arguing that the nascent electric car market needed undivided attention and support. Conversely, MSIL, Toyota Kirloskar Motor (TKM), and HCIL endorsed the policy, arguing incentives should be extend to all green technologies, including plug-in and strong hybrids, to expedite emission reductions.

Hyundai, Mahindra & Mahindra, and TKM did not respond to Business Standard’s queries concerning the surge in strong hybrid car sales in UP following the July 5 order.

A spokesperson for Tata Motors, which held a 64 per cent share of India’s EV market as of July, highlighted that the PM E-DRIVE scheme, which was recently cleared by the Union Cabinet, focuses exclusively on EVs to fulfil several national interests, such as zero-emission mobility, energy security, and job creation and skill building. “Supporting non-zero emission technologies does not help in fulfilling these objectives,” the spokesperson added.

Hardeep Singh Brar, senior vice-president of sales and marketing at Kia India, echoed this sentiment, saying the company endorses and aligns with the central government's policy towards providing incentives for EVs as they are truly zero-emission vehicles. "In line with this, we plan to launch a couple of new EVs in the coming years. If market demand and customer preference shift towards strong hybrids, as a leading car manufacturer, we have the expertise to cater that demand,” he said, but stressed “we believe that continuous support for hybrids may slow down the adoption of EVs and the development of the necessary infrastructure in the country.”

“Our focus remains on accelerating the shift to a fully electric future,” Brar added.

Reflecting on the broader implications of UP's policy, Ravi Bhatia, president of Jato Dynamics India, said: “This dramatic shift (in strong hybrid car sales in UP) underscores the potential of targeted policies to accelerate the adoption of greener technologies.”

He further noted that while EVs are growing steadily, hybrids offer “an attractive middle ground” for consumers, combining improved fuel efficiency with familiar refuelling infrastructure.

“The UP government's foresight in incentivising hybrids could serve as a model for other states seeking to diversify their approach to sustainable transportation. As the auto industry navigates the complex transition to alternative fuels, such region-specific strategies may prove crucial in shaping India's green mobility future,” he added.

Automakers React:

>Strong hybrid

Maruti: Customers in UP have responded positively

HCIL: The decision to waive registration tax has significantly boosted their (strong hybrids') affordability

>Electric 

Tata Motors: Supporting non-zero emission tech does not help in fulfilling (national) objectives

Kia India: Continuous support for hybrids may slow down EV adoption