Pakistan's Hybrid Car Prices Surge After GST Hike Amidst Auto Policy Uncertainty

Local car manufacturers in Pakistan, including Indus Motor Company and Honda Atlas Cars Limited, have significantly increased the prices of hybrid electric vehicles (HEVs) following a substantial hike in the General Sales Tax (GST) from 8.5% to 25% for these vehicles in the FY27 budget. Indus Motor Company raised prices for its Toyota Corolla Cross HEV models by over Rs1.3 million, while Honda Atlas Cars Limited increased the price of its HR-Ve model by approximately Rs1.37 million. Other manufacturers have reportedly halted invoicing and deliveries of hybrid vehicles, possibly awaiting clarity on the new Auto Policy 2026-31 or hoping for a GST reduction. The steep price increases, ranging from Rs1.3 million to Rs1.9 million, are expected to dampen consumer demand and contradict the government's stated objective of promoting fuel-efficient vehicles. The previous auto policy expired on June 30, 2026, and the new policy has yet to be officially announced, despite claims that a draft has been prepared and shared with stakeholders. Finance Minister Muhammad Aurangzeb indicated the policy was under review by a prime minister-appointed committee. Meanwhile, incentives for importing completely knocked down (CKD) kits for electric vehicles have been extended until June 30, 2027. Separately, regulatory duties on various imports, including automobiles, have been reduced as part of the National Tariff Policy 2025-30, with maximum regulatory duty capped at 20%. Customs duties on CKD kits, auto parts, and completely built-up (CBU) vehicles have also been lowered. However, these tariff reductions may not benefit local assemblers who import under existing concessionary regimes, as their applicable customs duties on components and kits remain up to 30% under SRO 656.