Japanese automaker strengthens position in India with hybrids

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Indian consumers’ desire to move away from gasoline cars was supposed to be Tesla and BYD’s shining moment in the world’s third-largest car market. But traditional automakers, which have dominated the Indian market for decades, have an ace up their sleeve: hybrid cars.

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While demand for electric vehicles is surging around the world, Indian consumers are opting for a different vehicle: hybrid cars that don’t require external charging.

According to a report by Indian research firm Care Ratings, hybrid vehicles are expected to account for 10% of total car sales in India by the fiscal year ending March 2027, while EVs are expected to account for 5%.

Puneet Gupta, director of S&P Global Mobility, which focuses on the Indian market, told CNBC that cost-conscious consumers who previously bought diesel cars are starting to shift to hybrid cars.

Sales of hybrid cars in the world’s third-largest car market nearly quadrupled from 98,010 in the fiscal year ending March 2020 to 362,866 in the fiscal year ending March 2026, according to Care Ratings.

Meanwhile, according to a report based on vehicle registration data from the Indian government, annual sales of electric vehicles were 131,865 units until March 2026.

“It’s clear that hybrid vehicles are gaining momentum faster than EVs in the passenger vehicle sector (in India),” Diwakar Murugan, senior automotive analyst at Omdia, said in an email to CNBC. He added that it is “remarkable” that hybrid vehicles are punching above their weight, achieving strong growth with just eight models on the market so far compared to more than 40 EV models.

The transition away from internal combustion engine vehicles (ICE) was supposed to create the following global EV companies: tesla and BYD However, it has emerged that Japanese manufacturers, which already dominate the Indian car sector, are trying to deepen their grip on the market by offering hybrid cars instead of pure EVs.

Since 2025, Tesla has sold fewer than 400 cars in India, and BYD has sold less than 7,000, according to government data.

In the EV field, automakers are Mahindra & Mahindra and tata motorsThe company, which mainly sells ICE vehicles, is the main player. This is in stark contrast to BYD and Tesla’s global dominance. In 2025, BYD was the world’s top EV seller with 2.26 million units, while Tesla sold 1.64 million units.

Japan’s hybrid toyota and maruti suzuki — Indian subsidiary of suzuki automobiles Arun Agarwal, vice president of basic research at Indian brokerage firm Kotak Securities, said the company is India’s top manufacturer, with popular models such as the Toyota Innova Highcross and Maruti Grand Vitara.

These companies already dominate India’s broad automobile market, with ICE vehicles accounting for a large portion of their sales.

Maruti Suzuki led car sales with over 1.8 million cars sold in the 12 months ending March 2026, including 20,466 powerful hybrids, according to data shared by S&P Global Mobility, according to data from the Indian Automobile Manufacturers Association, an auto industry body.

Toyota Kirloskar Motors, a joint venture between Japan and India, sold 366,896 cars during the same period, including 91,536 powerful hybrids.

Hybrid cars come in mild and strong types depending on battery capacity. Unlike mild hybrids, strong hybrids can run on electric power alone for short distances at lower speeds, resulting in better fuel economy.

Experts said they expect more hybrid cars to be launched in the next 12 months than in the past five years combined, given increased customer acceptance.

“Hybrid does not require any change in behavior as consumers refuel at the petrol pump as usual,” Murugan said, adding that hybrids do not have the range concerns of EVs and are more fuel efficient.

Experts told CNBC that the trend is likely to continue as many of India’s major car companies launch new hybrid models this year, attracting buyers looking for better fuel economy. Meanwhile, EV adoption in the country has been plagued by a lack of proper charging infrastructure, limited access to affordable global EVs and concerns about resale value, Mr. Gupta said.

hyundai and kiafrench car manufacturer renault, honda Both the company and Maruti Suzuki are planning to launch new hybrid models for Indian consumers, analysts said.

Meanwhile, despite progress in India-China relations and a trade deal between New Delhi and Washington, both Tesla and BYD continue to face sky-high tariffs as they wait to gain share in the world’s third-largest auto market.

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