Maruti Suzuki Stock Surges 6% Amid UP’s Hybrid Vehicle Fee Waiver; Hyundai Seeks to Capitalize

Shares of Maruti Suzuki India Ltd. (MSIL) surged as much as 6.5% to Rs.12,935 today amid heavy trading volumes followed by the Uttar Pradesh (UP) government’s decision to waive the registration fee on hybrid cars, aiming to promote green technology. 

Government Incentives 

The UP government’s step to extend zero registration fees to hybrid vehicles, alongside electric vehicles (EVs), is expected to revive sales of these cars in the markets. According to the reports, this policy has reduced the on-road price of strong hybrid cars in UP by up to Rs.4 lakh, and around 100 strong hybrid cars were sold per month in UP during FY24. Analysts shared that this policy could drive a substantial 10% decline in on-road prices, accelerating sales.

Impact on Maruti Suzuki 

Maruti Suzuki stands to gain from this policy, as UP is the second-largest state for domestic passenger vehicle sales, contributing around 10% of the total sales volume. MSIL, with a dominant market share of approximately 41.7% in the domestic passenger vehicle segment as of FY24, is poised to benefit. Popular models like WagonR, Swift, Brezza, Baleno, Ertiga, and Fronx are expected to see increased sales as per the reports.

Market Outlook 

The analysts prefer MSIL in the passenger vehicle space due to its increased penetration in utility vehicles (UVs) both domestically and internationally, consistent double-digit growth in the UV category, margin improvement, and presence in hybrid technology. Additionally, MSIL has planned to launch its first electric vehicle (EV) model in FY25, expanding its product portfolio. 

Impact on Competitors 

The UP government’s waiver is also beneficial for other hybrid car manufacturers like Hyundai, Motors, Honda Cars India (HCIL), and Toyota Kirloskar Motor (TKM). UP’s policy, which includes a 100% waiver on registration fees for strong hybrid electric vehicles and plug-in hybrid electric vehicles, significantly lowers the cost for consumers. 

Hyundai Ahead of IPO

As Hyundai prepares for its upcoming IPO, the company stands to benefit from the increased market interest in hybrid and electric vehicles driven by this government incentive. Hyundai, which also offers vehicles in this category, may see a rise in sales, aligning with the growing trend toward sustainable transportation.

Conclusion: The UP government’s decision to waive registration fees for hybrid vehicles has sparked a 6.5% rally in Maruti Suzuki’s stock, reflecting the market’s response to policies promoting green technology. As the automotive sector continues to evolve, companies like Maruti Suzuki, and Hyundai are well-positioned to capitalize on these emerging opportunities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.