Auto assemblers cut hybrid vehicle prices after GST reduction

Local assemblers have started lowering prices of hybrid electric vehicles after the general sales tax on cars up to 2,000cc was cut to 18% from 25%, Profit by Pakistan Today reported. Honda Atlas Cars trimmed the HR-V e by Rs1.07 million, bringing it to Rs9.299 million, while the HR-V VTIS now sells for Rs7.299 million after a Rs500,000 reduction. Indus Motor Company also lowered the cost of Toyota Corolla Cross hybrids, cutting the HEV X by Rs570,000 to Rs9.729 million and the Corolla Cross HEV by Rs550,000 to Rs9.299 million.

Industry representatives expect the reduced rate on electrified vehicles, now 18% instead of 25%, to revive sales after buyers held off while awaiting tax clarity. The 8.5% GST rate on electric vehicles belonged to the Automotive Industrial Development Policy (AIDP) 2021-26, which lapsed on June 30, and its successor has still not been announced. According to the industry, the earlier 25% rate caused demand to fall sharply and left assemblers holding a large unsold inventory of electrified vehicles until mid-September.

Assemblers say the missing policy framework has added uncertainty for production planning and investment decisions throughout the auto supply chain. Most booked vehicles should reach buyers within two months, and the industry expects sales to return to normal levels in the coming months. It is still unclear whether the tax will fall further, or hold, once the replacement policy is announced.