Hybrid vehicle prices in Pakistan have increased significantly after the government raised the General Sales Tax (GST) on hybrid electric vehicles (HEVs). At the same time, uncertainty continues because the Auto Policy 2026-31 has not yet been announced.
The previous Auto Policy expired on June 30, 2026. However, the government has not officially introduced its replacement. As a result, local automobile assemblers have started adjusting prices while waiting for further policy decisions.
GST Increase Raises Hybrid Vehicle Prices
The federal budget for FY2026-27 increased GST on hybrid vehicles from 8.5 percent to 25 percent. Consequently, several automakers have revised their prices upward.
Indus Motor Company increased the prices of its two Toyota Corolla Cross HEV variants. One model became costlier by Rs1.364 million, bringing its price to Rs10.299 million. Meanwhile, the second variant increased by Rs1.314 million and now costs Rs9.849 million.
Similarly, Honda Atlas Cars Limited raised the price of its HR-Ve hybrid model by Rs1.370 million. The vehicle is now priced at Rs10.369 million.
Therefore, buyers now face much higher costs when purchasing hybrid vehicles.
Some Automakers Pause Deliveries
While Toyota and Honda have already revised prices, other assemblers have adopted a different strategy.
Many companies have temporarily suspended invoicing and vehicle deliveries. They reportedly expect changes in the upcoming Auto Policy. Moreover, some believe the government may reduce the current 25 percent GST rate.
Because of this uncertainty, several customers waiting for deliveries could experience further delays.
Higher Prices Could Reduce Consumer Demand
Industry dealers believe the tax increase may affect demand for hybrid vehicles.
The additional cost of Rs1.3 million to Rs1.9 million could place electrified vehicles beyond the reach of many buyers. Consequently, customers may reconsider their purchasing decisions.
Experts also expect plug-in hybrid electric vehicles (PHEVs) to become more expensive because the same GST increase applies to them.
As a result, the latest tax changes could slow the government’s efforts to encourage fuel-efficient transportation across Pakistan.
Auto Policy 2026-31 Still Awaiting Notification
Although the previous policy expired on June 30, the government has yet to notify the Auto Policy 2026-31.
Automobile assemblers say they have received no official details regarding the new framework. Meanwhile, government officials previously stated that the draft policy had been prepared and shared with industry stakeholders.
Earlier, Finance Minister Muhammad Aurangzeb announced during his budget speech that the Auto Policy 2026-31 was under review by a committee formed by the prime minister. He added that the policy would be presented to Parliament after receiving approval from both the prime minister and the federal cabinet.
However, the government extended incentives on imports of completely knocked down (CKD) kits for electric vehicles, electric bikes, three-wheelers, cars, and buses until June 30, 2027.
Tariff Changes Introduced Under National Tariff Policy
Besides the GST increase, the government has also implemented the second-year tariff rationalisation plan under the National Tariff Policy 2025-30.
The latest notification reduced regulatory duties across almost all product categories. Furthermore, the maximum regulatory duty has been lowered from 50 percent to 20 percent.
The extent of the reduction varies across different sectors. Products that previously faced higher regulatory duties received larger reductions.
Previously, the highest regulatory duty applied to imported SUVs, 4×4 vehicles, and other large-engine automobiles.
Customs Duties Also Reduced
The government has also lowered customs duties and additional customs duties on several imported products.
Customs duty on CKD kits, auto parts, and completely built-up (CBU) vehicles has been reduced from 50-100 percent to 30-50 percent.
In addition, regulatory duty on commercial vehicle imports under relevant Pakistan Customs Tariff categories has decreased from 40 percent to 30 percent. The government plans to phase out regulatory duties completely by 2030.
Limited Benefit for Local Assemblers
Despite these tariff reductions, analysts believe local automobile assemblers may not receive major benefits.
Most manufacturers already import CKD kits and vehicle components under concessionary schemes. These schemes already offer customs duties of up to 30 percent.
Therefore, the latest reductions may have only a limited impact on their import costs.
Uncertainty Continues for Buyers
Pakistan’s hybrid vehicle market now faces growing uncertainty. Higher GST has already pushed vehicle prices upward, while delays in the Auto Policy continue to leave manufacturers and customers waiting.
Until the government officially announces the Auto Policy 2026-31, both buyers and the automobile industry are expected to remain cautious about future pricing and investment decisions.
