Maruti Suzuki plans an affordable hybrid rollout

Maruti Suzuki has chosen to favour hybrid cars over battery electric vehicles for the Indian market.

Maruti Suzuki India Ltd’s Japanese parent, Suzuki Motor Co., is working on developing cost-effective technologies that would make the otherwise exorbitantly expensive hybrid cars affordable for buyers in India.

India’s largest carmaker will also seriously consider bringing to India plug-in hybrids that Suzuki sells in Europe and the US.

“We don’t have an immediate plan of bringing plug-in hybrid technology into India, but I think it is a very interesting proposition and we must consider this really seriously,” said Hishahi Takeuchi, managing director, Maruti Suzuki.

Maruti Suzuki is hoping for policy decisions involving a potential reduction in taxes on hybrid vehicles to drive market growth in the technology that it has chosen to favour over battery electric vehicles for the Indian market.

Hybrid vehicles are powered both by traditional internal combustion engines and electric motors, which can be used for short distances and are recharged as the vehicle runs. These cars do not need to be plugged into a charger for powering up. In plug-in hybrids, as the name suggests, the batteries can be recharged as electric vehicles are.

Globally, EV sales are beginning to dwindle as buyers keen on graduating from the conventional models seek the convenience of hybrid cars over EVs. Hybrids, however, are expensive.

Hybrid engines can cost as much as 20% more than their conventional fossil fuel-powered counterparts.

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Maruti Suzuki on Friday reported a 48% jump in net profit at ₹3,877.8 crore for the January-March quarter, riding a 20% year-over-year increase in revenue to ₹1,40,933 crore.

However, sales of its CNG models fell by 400 basis points, accounting for 26.9% of overall sales as compared with 30.8% in the preceding three months, adversely affecting Maruti’s operating performance during the final quarter of the 2023-24 financial year.

A taxing hybrid market

“The market for hybrids, to an extent, is determined by the price of the cars. And as we know the duty on hybrids is 43%,” said R.C. Bhargava, chairman of Maruti Suzuki.

“We will know once elections are over and the GST council looks at rates… We don’t know what the ultimate view of the GST Council will be and what the view of the (new) government will be,” Bhargava said. “So how far the expansion and how quickly the expansion of hybrids and EVs happens, we will only know in the future.”

The volume of hybrid cars that Maruti will be able to sell in the ongoing financial year will, therefore, be determined by whether the GST Council decides to relook its taxes on hybrid vehicles, he said.

Mint reported earlier this week that hybrid vehicles will likely have to bear the cess load for longer, as the government will likely consider rationalising the cess on hybrids only as part of a larger overhaul in the GST framework.

As far as electric vehicles go, Maruti will first export the cars it produces to Europe for Suzuki before launching the models in India.

“We will start production (of EVs) in this financial year. We have a commitment to export the first lot of cars to Europe. So I would imagine that the domestic market may not see any reasonable numbers within this financial year,” Bhargava said.

Also read: Rural India drives passenger vehicle sales record in FY24

Maruti’s chairman was tempered in this optimism for India’s passenger vehicles industry, however.

“The car industry today is not looking at double-digit growth in FY25… But I think that if the conditions become what I think they could become after the elections, then I think Maruti Suzuki could at least be in a position to get, if not to over double-digit sales growth, but very close to double-digit growth, in the coming year,” he said.

Bhargava added that the small cars segment, which has been shrinking since the Covid-19 pandemic due to rising prices, will continue to suffer some pain for the next couple of years. “I don’t expect small cars to grow this year, or even next year,” Bhargava said.