Hybrid Car Prices Slashed After GST Cut To 18%

Auto assemblers in Pakistan have started reducing prices of hybrid electric vehicles (HEVs) after the government lowered the general sales tax (GST) on vehicles up to 2,000cc from 25% to 18%. The revised tax rate took effect on September 13.

Honda Atlas Cars has reduced the price of its HR-V e by Rs1.07 million, bringing it down from Rs10.369 million to Rs9.299 million.

The price of the HR-V VTIS has also been cut by Rs500,000, from Rs7.799 million to Rs7.299 million.

Honda said the revised prices would be offered for a limited period and on limited available stock. The new retail rates apply to orders invoiced on or after September 25.

Indus Motor Company has also announced price reductions for its Toyota Corolla Cross hybrid models.

The Toyota Corolla Cross HEV X is now priced at Rs9.729 million after a Rs570,000 reduction, while the Corolla Cross HEV has been reduced by Rs550,000 to Rs9.299 million.

The price cuts follow the government’s decision to reduce GST on electrified vehicles from 25% to 18%. Industry representatives expect the lower tax rate to support a recovery in sales after many consumers delayed purchases while waiting for clarity over the applicable tax regime.

Under the Automotive Industrial Development Policy (AIDP) 2021-26, which expired on June 30, GST on electric vehicles stood at 8.5%.

The automotive industry has been waiting for a new policy framework since the expiry of the AIDP. The new policy was expected to take effect from July 1 but has not yet been announced.

Assemblers have said the lack of a clear policy framework has created uncertainty throughout the automotive value chain, affecting business planning, production schedules and investment decisions.

Several companies temporarily delayed vehicle invoicing during July and August because of uncertainty surrounding the applicable policy and tariff structure.

According to industry representatives, the earlier 25% GST rate caused a significant decline in demand and resulted in assemblers holding substantial stocks of unsold electrified vehicles until mid-September as customers waited for clarity on the tax rate.

The industry now expects vehicle sales to gradually return towards normal levels in the coming months. However, uncertainty remains over whether GST will be reduced further or remain at the current 18% rate under the upcoming auto policy.

Most vehicles already booked with assemblers are expected to be delivered within the next two months.

Completely knocked-down (CKD) kits also remain readily available at assembly plants despite geopolitical tensions in the Middle East following the Iran-US war that began on February 28.

Separately, Mega Motor Company (MMC), the official BYD partner in Pakistan, announced that BYD has reached 10,000 vehicles on Pakistani roads.

The company described the milestone as the fastest expansion achieved by a new entrant New Energy Vehicle (NEV) brand in Pakistan’s automotive industry.