Will Yogi government’s decision increase tension?
There is a turmoil in the country’s automobile sector due to a decision by the Uttar Pradesh Chief Minister Yogi Adityanath government. Tension has increased for those automobile companies that have been focusing on electric vehicles for a long time. Among them are Tata Motors and Mahindra & Mahindra. What is the reason for all this and why is tension increasing for these companies?
The Yogi Adityanath government has waived 100% registration fees for hybrid cars in the state from July 1. Due to this, the on-road price of these cars has been reduced by Rs 3-4 lakh. Hence, EV companies are apprehensive that other state governments will also take such a decision.
Car sales are falling worldwide
A downward trend in car sales is currently being observed worldwide. Looking internationally, sales of Volkswagen, one of the world’s largest car companies, have fallen sharply. According to the agency, the company’s car sales fell by 20 percent in the first quarter of calendar year 2024.
Domestically, automobile retail sales in India fell by 6.8 per cent in June alone. According to the Federation of Automobile Associations (FADA), which compiles data on automobile retail sales, this is a very bad time for automobile sales in the last two and a half years. In the month of June, only 2,81,566 cars were sold in the country. Even in the month of May, there was a 1 per cent year-on-year decline in automobile sales.
This is the reason why most of the car companies have reduced the prices of many of their car models by thousands of rupees. Like Tata Motors has reduced the ex-showroom price of the XUV700 by up to Rs 1 lakh on Nexon, while Mahindra has reduced the ex-showroom price of the XUV700 by over Rs 2 lakh.
The situation in the electric vehicle segment is getting worse
When it comes to electric cars (EV), the situation is worse. According to FADA, sales of electric vehicles fell by 13.5 percent in June. In May, they had fallen by 1.24 percent. In January of this year, sales grew by 136.8 percent.
Tata EV is the largest company in this segment. Other market players include Mahindra & Mahindra, Hyundai and MG Motors. Falling car sales in any country is not considered a good sign for the GDP, because it shows the income level of the people of the country, the disposable money they have and the private consumption pattern.
Maruti benefits from UP government’s decision
The country’s largest automobile company, Maruti Suzuki India, stands to gain the maximum benefit from the decision taken by the UP government regarding hybrid cars. The reason is that Maruti Suzuki currently has the largest range of hybrid cars in the country. Toyota Kirloskar Motors also has a range of hybrid cars under the crossover agreement. While a Honda model is also included in this category.
Industry experts say the UP government’s decision has divided the auto sector. Tata and Mahindra will be the worst hit by this decision. If other state governments also follow the UP model, this tension will increase further.
Recently, Union Minister Piyush Goyal also expressed concern over the falling sales of electric vehicles. The Uttar Pradesh government has been holding talks with automakers to increase sales of electric vehicles in the state. At the same time, Tata and Mahindra have not given any response on the UP government’s decision on hybrid cars.
