Shares of EV makers, CGD player MGL and light goods vehicle manufacturers tumbled on March 11, taking along stocks of related OEMs, fearing business impact due to Maharashtra’s hike in motor tax announced in the state Budget for 2025.
Mahindra & Mahindra (M&M) shares plunged over 3 percent in early trade, extending the selling pressure seen in past few weeks after hitting a 52-week high on February 10, but is higher than the 52-week low of Rs 1,789 hit on March 15 last year. Mahindra & Mahindra had recently unveiled two electric SUVs - BE 6 and XEV 9e - and also produces CNG-powered mini trucks.
The shares of Ashok Leyland, which makes vehicles used for construction and carries light goods, dropped nearly 3 percent, extending the fall by nearly 17 percent in the last 6 months.
Mahanagar Gas (MGL), which supplies compressed natural gas (CNG) and piped natural gas (PNG) and is based mostly in Maharashtra, also saw its shares under pressure, dropping nearly 1.47 percent.
Maruti Suzuki and Tata Motors, which also may be affected by the hike in motor tax, saw marginal losses in early trade. Notably, HSBC has given a 'Buy' call on Maruti Suzuki, with a target of Rs 14,000 per share. This implies an upside potential of nearly 21 percent form the stock's current market price of Rs 11,551 per share.
While presenting the state's Budget, Maharashtra Finance Minister Ajit Pawar had proposed to increase the motor tax levied on compressed natural gas (CNG) four wheelers by one percent. Currently, the motor vehicle tax levied on such cars ranges between 7 to 9 percent, based on vehicle and price.
Additionally, a 6 percent tax of electric vehicles priced above Rs 30 lakh was also announced, estimated to generated an additional Rs 170 crore for the state. The budget also proposed to impose 7 percent motor vehicle tax on vehicles used for construction work and light goods carrying vehicles. This is expected to generate Rs 625 crore in additional revenue for the state in FY26.
The proposed changes are set to take effect from April 1 with the beginning of the financial year 2026. Ajit Pawar, who is also the Deputy Chief Minister of Maharashtra, presented the first full Budget of the Mahayuti 2.0 government on March 10.
Maharashtra ranked second in terms of EV registrations between 2019 and 2024, second only to Uttar Pradesh, registering 4.39 lakh EVs out of the total 36.4 lakh registrations in India. Additionally, several automakers have their headquarters in the state.
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