Toyota and Maruti Shift into High Gear: Hybrid Cars Get a Boost in Uttar Pradesh with New Tax Breaks

Toyota and Maruti Suzuki are making a big push to promote their hybrid cars in Uttar Pradesh, India’s most populous state. They are using a variety of marketing tactics, from Instagram ads to telesales, to take advantage of new tax breaks that make these cars cheaper for buyers.

Controversy in India’s Auto Industry

These tax waivers have caused some controversy in India’s auto industry. While Toyota and Maruti are benefiting, other companies like Tata Motors, Mahindra and Mahindra, and Hyundai are worried. They think the tax breaks will hurt their sales of fully electric cars. These companies tried to get the tax breaks reversed last month, but they weren’t successful, and now they fear other states might follow Uttar Pradesh’s example.

Sales Teams Push for Hybrid Sales

At the Sunny Toyota showroom in Lucknow, the capital of Uttar Pradesh, salespeople are busy calling customers who visited in the last six months. They’re telling them about the big savings they can get on hybrid cars due to the tax waivers. For example, buyers can save ₹13 lakh (about $15,800) on a Toyota Vellfire and ₹4.2 lakh (about $5,200) on a Toyota Camry.

Aggressive Marketing Campaign

One Instagram ad from the dealer says, “Save big … Order now and get your hybrid vehicle delivered right at your doorstep.” This marketing push comes after Toyota successfully lobbied the state to approve tax breaks for hybrid cars, leading to savings of around 10% for buyers. Uttar Pradesh is a key market, accounting for about 10% of India’s car sales.

Hybrids Versus Electric Vehicles

India has a federal tax of 5% on electric vehicles (EVs) while hybrids are taxed at 43%, slightly lower than the 48% tax on gasoline cars. State taxes are additional and vary by state. Globally, Toyota has focused more on hybrids—cars that use both gasoline engines and batteries—rather than fully electric vehicles. This strategy is paying off, especially as concerns about charging infrastructure and high prices limit the demand for EVs worldwide, while hybrid sales continue to grow.

Rising Demand for Hybrids

In Uttar Pradesh, Toyota and Maruti Suzuki dealers have noticed a rise in hybrid car inquiries. The companies have also increased pressure on their sales teams. One Maruti salesperson mentioned, “We have been asked to sell at least 250 cars each month. There’s a lot of pressure. We are trying to shift all sales to hybrids.”

Doubling Showroom Inquiries

Toyota declined to comment on the matter, but Rahul Bharti, executive director for corporate affairs at Maruti, said their showroom inquiries have “nearly doubled since the benefits have been applied” for hybrids. Dealers are using online and WhatsApp ads with catchy phrases like “Enjoy the nil road tax offer” and “Say Goodbye to Diesel.”

Advising Customers to Act Fast

At the Sunny Toyota dealership, salespeople are focused on convincing customers who were planning to buy gasoline or diesel cars to switch to hybrids, which now offer better value thanks to the tax breaks. Some dealers are advising customers to act quickly. “No one knows how long the scheme will last,” said Praveen Saxena, a sales manager at a Toyota showroom in Kanpur. He noted that his hybrid car sales went up by 50% after the tax waivers were introduced.

Customer Interest in Hybrids

K.S. Dhatwalia, a former Indian government official, decided to buy a new Toyota hybrid Hyryder, partly because of the tax benefits. “Hybrids are less polluting, and the tax savings were an added bonus,” he said.