To promote the use of environment-friendly vehicles in the State, the Uttar Pradesh (UP) government has announced a complete waiver of registration tax on strong hybrid cars. The move is likely to benefit companies like Maruti Suzuki India (MSIL), Honda Cars India (HCIL) and Toyota Kirloskar Motor (TKM) wherein customers can benefit up to ₹3.50 lakh.

For instance, Maruti Suzuki’s Grand Vitara and Invicto or Toyota Hyryder and Innova Hycross or even Honda’s City e:HEV, which are all strong hybrid vehicles, are covered by this offer.

Sources close to the development told businessline that the UP government, through a circulation dated July 5, has implemented the policy to give “100 per cent waiver on registration fee of strong hybrid electric vehicles and plug-in hybrid electric vehicles” with immediate effect.

The UP government charges eight per cent road tax on vehicles which cost less than ₹10 lakh, and 10 per cent on vehicles costing more than ₹10 lakh (on ex-showroom).

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

In the second quarter also, the State sold 1,09,712 units — a growth of 10.26 per cent, against 99,501 units in Q2 last year.

Auto policies

“This will help the sales of strong hybrid vehicles in the State, although the number of buyers is small right now. Most buyers of such vehicles already own a vehicle, and first time buyers are very less right now. Having said that, such a move by the Chief Minister Yogi Adityanath, will help the auto sector,” Ankit Raj, Chairperson, Federation of Automobile Dealers Associations (FADA), told businessline.

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

According to an MSIL dealer, the demand for strong hybrid vehicles is not much right now in the State, but with this announcement, sales may increase.

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

HCIL, which sells only one strong hybrid may also get some boost in its sales, with this policy. The Honda City e:HEV starts with a price tag of ₹19 lakh (ex-showroom).

“Waiving off 100 per cent road tax on strong hybrid vehicles is a milestone decision by the Uttar Pradesh government which will encourage adoption of these environment-friendly vehicles. Customers can now opt for eco-friendly hybrid vehicles like our City e:HEV in more affordable manner. This is also aligned with our global commitment to sustainable mobility and our global vision of achieving zero carbon emissions by 2050,” Kunal Behl, Vice-President, Marketing & Sales, HCIL, said.

This forward-thinking decision will revolutionise the adoption of sustainable transportation in the State, Behl added.

“It is clear that tax reductions on hybrids could be a significant catalyst, driving the move from pure internal combustion engine (ICE) to greener alternatives. While the adoption of EVs is certain, the journey requires hybrids. With the enhanced value offered by hybrid vehicles, consumers may reconsider their preference for pure gasoline models like the Kia Seltos or Hyundai Creta and instead, lean towards strong hybrid options such as the Toyota Hyryder and Maruti Suzuki Grand Vitara,” Puneet Gupta, Director, Sales and Powertrain Forecast, India & ASEAN, said.

Analysts say other states may also adopt the UP model of waiving the registration cost for strong hybrid vehicles. This move could boost vehicle sales, which are currently struggling due to the base effect. Also, sales of luxury vehicles might see an increase.