KARACHI — Despite offering lower tax rates on hybrid vehicles, the government’s push for eco-friendly transport is hitting a roadblock as Pakistan’s auto consumers remain hesitant to shift from petrol to hybrid cars. Industry experts blame the sharp price difference and long payback period as the real deterrents.
According to auto sector analysts, the general sales tax (GST) on hybrid electric vehicles (HEVs) is fixed at just 8.5%, compared to 12.5% to 25% on locally assembled petrol vehicles, depending on engine size. However, this tax benefit isn’t translating into sales, as a typical hybrid SUV is priced at around Rs12 million, compared to Rs8 million for a similar petrol variant — a gap of roughly Rs4 million.
Syed Asif Ahmed, General Manager of MG Pakistan, noted that such a significant price differential places hybrids well beyond the global affordability benchmark. “Internationally, hybrids are only viable when priced no more than 10% above petrol cars. In Pakistan, the gap is over 40%,” he said.
Although HEVs offer better fuel economy — saving around Rs35 per kilometer due to higher mileage — the cost recovery timeline is proving to be unfeasible for most buyers. To offset the Rs4 million price difference, a consumer would need to drive the hybrid for 115,000 kilometers, which takes more than 7.5 years at an average of 15,000 kilometers per year.
Ahmed explained that most consumers don’t keep their vehicles long enough to benefit from these savings. Moreover, the advantages of hybrids are mostly limited to city driving at lower speeds (40–60 km/h). On highways, the fuel economy drops to match that of petrol-powered cars.
The issue is compounded by high maintenance costs. Despite a perception of lower upkeep, hybrid vehicles in Pakistan face expensive periodic maintenance due to import duties on non-localised parts, including a 30% customs duty and an additional 2% surcharge. This increases the overall cost of ownership compared to regular vehicles.
Last year, over 35,000 SUVs were sold in Pakistan, with about half being hybrids, according to industry estimates. While hybrid sales doubled in 2024, experts argue this growth is largely limited to the luxury segment and doesn’t reflect widespread consumer adoption.
In contrast, electric vehicles (EVs) may offer a better long-term alternative due to lower maintenance needs — often required only after 15 months. But challenges such as high initial cost and insufficient charging infrastructure are preventing large-scale EV adoption.
Analysts conclude that for Pakistan to see meaningful adoption of cleaner vehicle technologies, it must address the real cost barriers — not just taxes — and provide a long-term roadmap that makes hybrids and EVs viable for the average consumer.
