The Maruti Grand Vitara comes with a full hybrid powertrain along with the regular IC engine. It was reported that the Union Minister of Roads, Transport and Highways, Nitin Gadkari, had proposed a reduction in taxes on hybrid cars. The Indian automobile market is growing rapidly. As emission norms become more stringent with each passing day, carmakers are transitioning to electrification. I feel Maruti Suzuki has clearly lagged behind in terms of fully electric cars. However, it is inching towards that goal with full hybrid cars like the Grand Vitara.
Maruti Grand Vitara Won’t Get Cheaper
MoRTH Minister, Nitin Gadkari had put forth a proposal to the government to slash the taxes on hybrid cars from 48% to 12%. At present, the breakup is as follows – 28% GST and 15% Cess. If the GST component were reduced to 12%, we would’ve got a significant reduction in the final price of the Grand Vitara in the case of Maruti Suzuki and other hybrid cars from other carmakers too. However, the government has rejected this proposal. That would mean that the initial costs will continue to be high for hybrid cars going forward as well.
At present, the biggest hurdle for customers to embrace full hybrid cars is their substantially higher prices. The thought process behind this is the fact that since the running costs are very low, the initial high amount will be compensated. In fact, this is the same logic which applies to EVs too. But there are other complexities involved with fully electric cars, which we will dive into some other time. In the case of hybrid cars, the fact remains that the disproportionately higher asking prices can only be compensated if the running is high and the owners have the car for many years. Hence, the price equation doesn’t make sense for a whole lot of buyers. I believe relief in tax could’ve persuaded new customers to take the plunge.
Our View
If the government wants the mass public to opt for the environmentally-favourable vehicles, incentives are needed. We have seen this with EVs. Government subsidies and incentives could go a long way in popularizing a specific type of vehicle. Today, the EV industry is growing exponentially. Similarly, I am certain that lower taxes on hybrid cars would’ve pushed the sales rapidly. But that is not the case anymore. Hence, we will have to rely on organic growth in this segment of our market.
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