Pakistan embraces a greener way of moving around

LAHORE - Duty and tax exemption on Hybrid cars have caused quite a stir in the automotive sector but there’s even more, VVIPs will now not enjoy the royal treatment of importing duty free cars and everyone would be a passenger of the same boat steered by the new Prime Minister Nawaz Sharif.

Pakistan government has announced that HEVs (Hybrid Electric Vehicles) up to 1200cc will be completely exempted from duty, HEVs from 1201 to 1800cc will have 50% exemption, HEVs from 1801 to 2500cc will have 25% exemption and anything above 2500cc will have to bear all relevant duties and taxes.

Hybrids or electric cars have been around for quite a while however, they are still in their infant age as the world is not prepared to accept hybrid/electric vehicles over normal, combustion engine vehicles. The infrastructure is not there and according to one research which was shared on Top Gear that to manufacture a Toyota Prius, which is the current throne-holder in hybrids, is so complicated that in the long-term, a Prius would do more damage to the environment then a Land Rover Discovery.

So buying one for the sake of saving the planet is completely pointless but hybrids are nonetheless quite economical and that’s a very good reason to buy one because, we may never run out of oil but extracting oil is indeed getting more expensive and it will continue to be more expensive. The duty relaxation on hybrid vehicles have been done for only one reason; to ease the pressure on our fast depreciating gas reserves so that they can be provided to our industry and electricity generation sector. However, they may have different impact on our auto industry. Breaking the monopoly of the local auto assemblers may right now not be one of them but they will have to expand their portfolios and decrease prices to remain competitive as the pressure from imported hybrid cars rise. The new government hasn’t favored the importers only as per the new budget; local auto assemblers will now be able to import CKD (Complete Knockdown Kits) on 25% duty instead of 35%. CKD (complete-knockdown-kit) is basically all the car parts which are manufactured in one country, and then shipped to another to be assembled into the final product. Pakistani automakers are auto assemblers and they import CKDs’ of cars and assemble them here.

Hybrid vehicles operate on a combination of petrol engine and electric motors. Toyota Prius has a system where electric motor only comes into play when you’re going on low speeds, in bumper-to-bumper traffic for example, and as you speed up, the petrol engine comes into play. Another system is that electric motors power the wheels and as the battery runs out of juice, the onboard petrol engine swings into action to generate electricity to power the batteries. Apart from the importing sector, the most an automaker can capitalize on this policy is Honda as it is the only one that offers that best Hybrid cars on the market today; Honda Jazz Hybrid with a 1200cc engine and Honda CR-Z Hybrid with a 1500cc petrol engine. The best, and the most boring and not so good looking option in the 1800cc area is the Toyota Prius which previously had a 1500cc engine but was revised to 1800cc in 2009-2010 but Yaris (Vitz) Hybrid is one better option from Toyota. Although the effect of this new policy remains to be seen on the part of local auto assemblers as Suzuki is almost empty handed on Hybrids while Honda Atlas has remained quiet on this matter even though the high price of Civic has cost them a lot of customers, yet they remain anonymous on this whole development. Indus Motors was however working for a while on introducing Prius in Pakistan and they had announced they would introduce it later this year. Government denied any attention to local auto industry’s calls to reduce import age of cars or not remove duty on hybrids which is certainly weakens their monopoly however, we also believe that the new government should’ve introduced special schemes and incentives to attract more foreign automakers entry into Pakistani market who otherwise are unable to enter the market due to local automakers’ monopoly.

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