Automotive assemblers in Pakistan have begun passing on the benefit of a reduction in the general sales tax on hybrid electric vehicles to consumers, nearly two weeks after the rate was cut from 25 percent to 18 percent on vehicles up to 2,000cc with effect from September 13. Honda Atlas Cars Limited has revised the prices of its HR-V e:HEV and HR-V VTIS models to Rs9.299 million and Rs7.299 million from Rs10.369 million and Rs7.799 million respectively, with the company noting that the new prices are for a limited time and will be offered on limited stock, applicable to all orders invoiced on and after September 25. Indus Motor Company has similarly revised prices for the Toyota Corolla Cross HEV X and the Cross HEV to Rs9.729 million and Rs9.299 million respectively, reductions of Rs570,000 and Rs550,000 from their previous price points.
The delay in passing on the tax reduction followed a period of significant uncertainty in the automotive sector. Under the Automotive Industrial Development Policy 2021 to 2026, which expired on June 30, the general sales tax on electrified vehicles had been set at 8.5 percent. Following the policy’s expiry, assemblers and the industry at large had been awaiting a new automotive policy that was expected to take effect from July 1 but had not been announced by the time the 25 percent rate came into force, creating a policy vacuum that caused considerable disruption. Several assemblers temporarily deferred vehicle invoicing during July and August due to the absence of clarity on the applicable tariff regime, while consumers held off purchases in anticipation of a resolution, leaving a sizable stock of electrified vehicles unsold at assemblers’ facilities until mid-September.
Syed Asif Ahmed, Director of Sales and Marketing at Chery Master, said the government’s decision to settle the general sales tax issue at 18 percent from 25 percent may revive sales, as consumers had delayed purchases while waiting for clarity. He said sales are expected to return to normal in the coming months, though uncertainty remains over whether the rate will drop further or stay unchanged depending on the decisions taken in the new auto policy, which is still pending announcement. He added that most vehicles from his company and other assemblers would be delivered to customers within the next two months.
Assemblers have noted that despite the broader policy uncertainty, completely knocked down kits remain readily available at their plants, with supply chains holding up notwithstanding ongoing geopolitical tensions in the region. The resumption of price cuts and deliveries comes as the industry looks to recover ground lost during the months-long freeze in demand, with the 18 percent general sales tax rate now serving as the operative framework for hybrid electric vehicles until a comprehensive new automotive policy is formally announced and takes effect.
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