The Uttar Pradesh government’s decision to waive registration fees on hybrid vehicles has ignited a storm in the market for sports utility vehicles (SUVs) with the Mahindras and the Tatas scrambling to slash the prices of their non-hybrid models to stay competitive.

The UP government’s unexpected move is expected to benefit Maruti Suzuki and Toyota Kirloskar Motor which have formidable hybrids in their portfolio.

The 100 per cent waiver of registration fees on strong and plug-in hybrids in Uttar Pradesh effectively reduced the price of Maruti Suzuki’s Grand Vitara by nearly ₹2 lakh in the state, making it a frontrunner in the hybrid segment.

Toyota Kirloskar sells the Innova Hycross and Urban Cruiser Hyryder with strong hybrid technology, while Maruti Suzuki sells some trims of the Invicto and Grand Vitara with strong hybrid mechanisms. Honda also sells some variants of the City with self-charging hybrid technology.

M&M swiftly countered by slashing ₹2 lakh off the XUV 700, effectively nullifying the price advantage Maruti gained from the UP policy.

Not to be outdone, Tata Motors retaliated with significant price cuts on its Harrier and Safari SUVs, lowering their starting prices to ₹14.99 lakh and ₹15.49 lakh, respectively.

The company also revised prices for its Nexon EV and Punch EV, offering discounts of up to ₹1.3 lakh and ₹30,000, respectively.

Both the Mahindras and Tatas said their price cuts were meant to celebrate sales milestones.

The move by the Uttar Pradesh government to waive registration fees for hybrid vehicles has been described by Maruti chairman R.C. Bhargava as a “step in the right direction”. Though the decision was made in 2022-23, the government started implementing the policy of waiving road tax from July 1.

“Whatever had held up the implementation of the policy, the UP government has been able to solve that and implemented the policy. We hope that other state governments will also be able to implement policies favouring cleaner technologies,” said Bhargava.

He praised the Bengal government for having waived the road tax for CNG vehicles.

"What we could see is a shift in SUV consumer preference from diesel or gasoline variants to hybrids,” Saharsh Damani, president of Federation of Automobile Dealers Associations of India, said.

UP meet

The UP government has called a stakeholders’ meeting on Wednesday to discuss the financial incentives that an EV-maker enjoys under the FAME II scheme, a government circular said. Maruti Suzuki, along with Tata Motors and Mahindra & Mahindra, have been invited.