Which Companies Manufacture Hybrid Cars in India?

The Indian auto sector is booming.

As per the industry body SIAM, in FY24, the industry recorded an annual growth of 12.5%. Other than passenger vehicles, all categories did well in the last financial year. Utility vehicles led the charge with an annual growth of 25.8%.

The key driving factors for this growth are higher disposable incomes, urbanisation, a rising middle class, and a host of government policies.

If the growth continues, then as per industry projections, the Indian auto industry could reach a size of US$ 300 billion (bn) by 2026.

The passenger vehicle (PV) segment is prominent within the auto industry. In FY24, this segment crossed annual sales of 4 million (m) for the first time. In the first quarter of FY25, PVs recorded sales of over a million units, specifically, 1,135,501 units.

This growth is being driven by sales of EVs, hybrid vehicles, and conventionally powered vehicles.

While the growth of EVs has been well documented, the hybrid boom is also underway. Hybrid vehicles are slowly but surely catching up to EVs in terms of popularity.

In this editorial, we will examine the top companies making hybrid cars in India.

#1 Maruti Suzuki

Maruti Suzuki is a subsidiary of Japan's Suzuki Motor Corporation. It's India's largest passenger vehicle company.

It primarily manufactures passenger and commercial vehicles. The company also offers spare parts and accessories, vehicle financing, and insurance through its subsidiaries.

It's the biggest hybrid car manufacturer in India. In fact, when the EV boom was taking off, the company deliberately went slow on its EV plans and focused on CNG vehicles.

The company is the leader in the hatchback segment which accounts for around 45% of its total volumes. Thus, the decision to target the CNG vehicle market initially, made sense.

The company's plan of using hybrids as a bridge between combustion engines and EVs was also a good idea as the EV ecosystem in India will take some time to evolve.

On Tuesday, 9 July, the stock surged about 7% intraday after the Uttar Pradesh government waived registration fees on hybrid cars.

Specifically, the state announced a 100% fee waiver on hybrid electric vehicles and plug-in hybrid electric vehicles. Both these types of vehicles use a regular internal combustion engine in addition to an electric powerplant. The plug-in type needs to be charged.

Media reports suggest that the fee waiver could reduce the on road price by about 400,000. The company could benefit significantly from this as most of its car models have hybrid variants.

#2 Tata Motors

Tata Motors is the automobile arm of the prestigious Tata Group.

The company designs manufactures, assembles, and sells passenger, utility, commercial vehicles, and defence equipment. It also offers vehicle financing, car service, spare parts, and accessories.

Tata Motors has an established presence in the global luxury car market via its subsidiary Jaguar and Land Rover (JLR).

It's a market leader in the commercial vehicle segment. It also has a leading market share in India's passenger electric vehicle (EV) segment. Its domestic EV brands have become a common sight on Indian roads such as Tata Punch, Nexon, Tiago and Tigor.

Tata Motors plans to grow its EV business aggressively. It plans to drive up EV penetration to double digits by launching ten new EVs by 2026.

While the company's main focus is the EV market, it's conventional and hybrid cars are still popular. Although not a huge share of revenue, its hybrid vehicles will benefit from an increasing consumer preference for hybrid cars.

#3 Unlisted Players

Although unlisted, Toyota India has a strong presence in the Indian hybrid car market.

It's hybrid vehicles are prices higher than the ones from Maruti and Tata, so it's not a direct competitor just yet. But that could change in the future. Investors should keep this in mind.

Toyota is a global giant in the hybrid passenger vehicle market. It has vast expertise in this domain and can be considered a pioneer in hybrid engine technology.

Hyundai India has been in the news recently for its IPO plans. Read our detailed analysis on the Hyundai India IPO here.

The company is the second biggest passenger vehicle firm in India. However, as far as hybrid vehicles are concerned, Hyundai is a laggard. As per the company's plans, it will launch its first hybrid vehicle in India only in FY27. The same is true for KIA Motors.

Conclusion

The recent shift in consumer preference towards hybrid cars in India is not surprising. As consumers move away from IC engine-powered cars, the switch to EVs is not as straightforward as it might seem.

India's EV ecosystem - charging infrastructure, battery replacement, etc - is still evolving. It will take some time, perhaps a few more years, to reach a stage of maturity. At that time EV adoption will really take off.

However, until then, hybrids could be the best option for many prospective car buyers, especially the first time customers.

This will be a trend that investors interested in the auto sector should watch carefully. The final word hasn't been written yet.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...