Maruti Suzuki India’s shares were climbing on Tuesday after the state government relaxed taxation on certain hybrid vehicles, possibly driving up sales for India’s biggest carmaker.

What Happened: The stock jumped after the Uttar Pradesh government said it would completely waive registration tax on strong-hybrid electric cars (HEVs) and plug-in hybrid electric vehicles (PHEVs).

This tax break benefits Maruti Suzuki’s Grand Vitara SUV and Invicto MPV, both featuring strong-hybrid technology. The Grand Vitara has a hybrid powertrain with a 1.5-litre petrol engine and an electric motor. The Invicto, a variant of the Toyota Innova Hycross, combines a 2-litre petrol engine with an electronic continuously variable transmission (e-CVT).

HEVs and PHEVs both use an internal combustion engine along with an electric motor. The difference is that PHEVs have a larger battery that needs external charging.

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Why It Matters: Under the relaxation of taxes, buyers in UP will save over ₹3 lakh on the Maruti Suzuki Invicto and more than ₹2 lakh on the Maruti Suzuki Grand Vitara.

Typically, Uttar Pradesh charges 8% road tax on vehicles that have an ex-showroom price of under ₹10 lakh and 10% on those above ₹10 lakh. With this new rule, hybrid vehicles are now exempt from the registration fee, just like electric vehicles. Around 100 strong hybrid cars were sold in the state in FY24.

Uttar Pradesh, India’s most populous state, is a major market for passenger vehicles in India, logging retail sales of 2.3 lakh units in the first half of this year, up 13% from 2.08 lakh units in the same period last year, according to the Federation of Automobile Dealers Associations (FADA).

Price Action: Maruti Suzuki’s share price climbed 5.59% to ₹12,695.55 around noon on Tuesday. The stock has gained nearly 23.5% so far this year.

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