According to media reports, the state of Uttar Pradesh in India has announced a reduction in taxes for hybrid vehicles, effectively lowering their prices by 10%. This move marks a significant victory for Toyota's lobbying efforts and raises expectations among industry experts and analysts that other states may follow suit.
Uttar Pradesh, the most populous state in India, stated in a notification released on July 5th that it would exempt hybrid vehicles from part of the registration tax, similar to electric vehicles. Hybrid vehicles use both electric motors and internal combustion engines, leading to fuel savings.
Maruti Suzuki, India's largest car manufacturer, collaborates with Toyota to produce and sell hybrid vehicles. Since the local media first reported the notification from Uttar Pradesh, Maruti Suzuki's stock price has surged by 5.5%. Uttar Pradesh accounts for 10% of India's total car sales.
With its best-selling Hycross and Hyryder SUVs, Toyota holds an 85% share of India's hybrid car market, making it the primary beneficiary of this measure, followed by Maruti Suzuki. Toyota and Maruti Suzuki did not respond to requests for comment from foreign media.
Uttar Pradesh's tax exemption policy applies to so-called strong hybrids (which can run on electric motors for a certain period) and plug-in hybrid vehicles.
The government under Indian Prime Minister Narendra Modi has focused its efforts on promoting green transportation by offering millions of dollars in incentives to companies producing electric vehicles, while providing no such benefits for hybrid cars.
India imposes a federal sales tax of only 5% on electric vehicles, compared to a high 43% tax on hybrid cars, which is close to the 48% tax on gasoline vehicles. Additionally, states levy their own registration taxes, further increasing the overall cost of purchasing a car.
As the world's top-selling car manufacturer, Toyota has long lobbied Modi's government to reduce taxes on hybrid vehicles, arguing that hybrids pollute less than gasoline cars but receive little policy support.
Honda, which also sells a hybrid version of its popular City sedan in India, stated that this decision "will undoubtedly attract more customers to join India's green transportation mission."
