Key Takeaways
- Pakistan’s Auto Industry Development and Export Policy expired, increasing sales tax on hybrid vehicles.
- Local automakers have suspended invoicing of hybrid models awaiting new policy.
- Government considering reducing sales tax to 18 percent but current rate remains in effect.
The expiry of Pakistan’s Auto Industry Development and Export Policy has brought hybrid vehicle sales to a near standstill, as buyers and automakers await the government's new policy. The policy, which expired on June 30, increased the sales tax on hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) from 8.5 percent to 25 percent.
Industry sources report that several vehicle assemblers have suspended invoicing and deliveries of hybrid models until the government announces the new policy. This has left many potential buyers in limbo, with vehicles unsold and buyers waiting for clarity on tax rates.
The delay in announcing the new policy has raised concerns among industry representatives who warn that continued uncertainty is detrimental to both manufacturers and consumers. They argue that the current 25 percent sales tax will hinder the adoption of hybrid technology and prevent the government from collecting potential tax revenue.
According to sources, objections from local automakers to an early draft aimed at accelerating electric vehicle adoption delayed the new policy. The industry hopes that a proposed cabinet summary reducing the sales tax on hybrid vehicles to 18 percent will be approved soon, but for now, the current rate remains in effect.
The government is reportedly considering this proposal as part of its broader strategy to promote sustainable transportation solutions. However, until the new policy is officially notified, the market for hybrid and plug-in hybrid vehicles continues to stagnate.
Industry officials emphasize that the delay has significant implications for both the automotive sector and consumers. They urge the government to expedite the process to ensure a smooth transition and maintain momentum in the adoption of cleaner technologies.
