Hybrid vehicle prices surge by up to Rs1.37m after GST raised to 25%

Local car assemblers have started increasing hybrid vehicle prices after the government raised the general sales tax (GST) on hybrid electric vehicles (HEVs) to 25% from 8.5% in the FY27 budget.

Indus Motor Company has increased the prices of its two Toyota Corolla Cross HEV variants by Rs1.364 million and Rs1.314 million, taking them to Rs10.299 million and Rs9.849 million, respectively.

Honda Atlas Cars Limited has also raised the price of its HR-Ve hybrid model by Rs1.370 million to Rs10.369 million.

According to a news report, other assemblers have reportedly suspended invoicing and deliveries of hybrid vehicles, expecting either changes in the upcoming Auto Policy 2026-31 or a reduction in the revised GST rate.

Industry officials say the sharp increase in prices could slow demand for hybrid and plug-in hybrid electric vehicles (PHEVs), with buyers now facing an additional cost of Rs1.3 million to Rs1.9 million per vehicle.

The Auto Policy 2026-31, expected to take effect from July 1, 2026, has yet to be notified. In his budget speech on June 12, Finance Minister Muhammad Aurangzeb said the policy was under review by a committee formed by the prime minister and would be presented to parliament after cabinet approval.

He also announced that incentives on imports of completely knocked down (CKD) kits for electric vehicles, including motorcycles, three-wheelers, cars and buses, had been extended until June 30, 2027.

Meanwhile, the government has notified SRO 1064(I)/2026, replacing SRO 1152(I)/2025, to implement the second phase of tariff rationalisation under the National Tariff Policy (NTP) 2025-30 from July 1, 2026.

Under the notification, the maximum regulatory duty (RD) has been reduced to 20% from 50%, while customs duty on CKD kits, auto parts and completely built-up (CBU) vehicles has been cut from 50-100% to 30-50%. Regulatory duty on commercial vehicle imports under PCT 8702, 8703 and 8704 has also been reduced to 30% from 40%.

However, industry officials believe these tariff reductions are unlikely to significantly benefit local assemblers, as most already import CKD kits and components under concessionary duty rates.