Sales of hybrid and plug-in hybrid vehicles across Pakistan have come to a near standstill after the sales tax on these vehicles rose from 8.5 percent to 25 percent, following the expiry of the Auto Industry Development and Export Policy 2021-26 on June 30.
The successor framework, the Auto Policy 2026-31, has yet to be notified, leaving buyers and manufacturers without clarity on future pricing.
According to industry sources, the delay in notifying the new policy stems from objections raised by local carmakers over an early draft that sought to accelerate the adoption of electric vehicles. As a result, several vehicle assemblers have suspended invoicing and deliveries of hybrid models altogether.
A senior industry executive said multiple assemblers had halted invoicing and deliveries of hybrid vehicles as the tax uncertainty persists.
A cabinet summary proposing a reduction in the sales tax rate to 18 percent is reportedly under consideration. Until it is approved, the higher 25 percent rate remains in effect, continuing to weigh on sales.
Another official from a car company said the absence of clarity was carrying a direct revenue cost each week, with vehicles that would otherwise be sold and taxed instead sitting unsold while buyers wait for the situation to be resolved.
