Local HEVs Face Price Hike After Tax Revision

Jawad

14 Jun 2024

299

Local HEVs Face Price Hike After Tax Revision

In the new fiscal budget for 2024-25, the government has dashed consumer hopes for tax exemptions or relief on locally assembled hybrid electric vehicles (HEVs). Instead, the “Finance Bill 2024” has removed clause 73 from the 8th schedule of the Sales Tax Act, 1990, which previously allowed the collection of an 8.5% general sales tax on these vehicles. This omission has reclassified locally assembled HEVs, subjecting them to the general sales tax rate of 25%, resulting in significant price increases.

Significant Price Hikes for Popular HEVs

The impact of this tax change will be particularly felt in the prices of popular HEVs such as the Haval H6 HEV, Jolion HEV, and Corolla Cross. Despite the Finance Minister Muhammad Aurangzeb's budget speech claims of supporting local industry, the reality appears contrary as these vehicles are set for steep price hikes. Consumers looking to purchase these models will now face considerably higher costs, contradicting the government’s stated objective of promoting local manufacturing.

Estimated Price Increases

For instance, the price of the Jolion HEV is expected to rise by Rs. 1,405,000, bringing its new price to Rs. 10,700,000 from the current Rs. 9,295,000. Similarly, the Haval H6 HEV is projected to jump by Rs. 1,804,506 to a new price of Rs. 13,670,000 from the previous Rs. 11,866,500. The Corolla Cross HEV and its variant, the Corolla Cross HEV X, will also see increases of Rs. 1,429,000 and Rs. 1,497,000, respectively, pushing their prices significantly higher. Hyundai's Santa Fe models will not be spared either. The Hyundai Santa Fe Smart is set to see an increase of Rs. 1,975,000, elevating its price to Rs. 14,965,000 from Rs. 12,990,000. The Santa Fe Signature will experience an even larger hike of Rs. 2,235,000, bringing its new price to Rs. 16,934,000 from the previous Rs. 14,699,000. These substantial price jumps illustrate the broad impact of the new tax regulations on HEVs.

Models	Current Price	Estimated New Price	Difference
Haval H6 HEV	11,866,500	13,670,000	1,804,000
Corolla Cross HEV	9,399,000	10,828,000	1,429,000
Corolla Cross HEV X	9,849,000	11,346,000	1,497,000
Santa Fe Smart	12,990,000	14,965,000	1,975,000
Santa Fe Signature	14,699,000	16,934,000	2,235,000

Withholding Tax Changes Add to Burden

Additionally, the withholding tax on new cars, previously calculated based on engine capacity, will now be based on the vehicle's invoice price, affecting cars up to 2,000cc. For example, a Suzuki Wagon R bought for Rs. 3.8 million will now incur a registration fee of Rs. 38,000 instead of the previous Rs. 20,000. This represents a significant increase in the cost of vehicle ownership, further burdening consumers.

These new fiscal measures have sparked debate among consumers and industry observers. The reclassification of CKD HEVs and the increased taxes on vehicle registration appear to contradict the government’s intention to support the local auto industry. Share your thoughts on these changes and their potential impact on the automotive market in the comments section.

HEV Price Increase Tax Hike Impact Local HEV Costs New Tax Slab Price Hike HEVs HEV Tax Update Tax Change Effects Rising HEV Prices Local Vehicle Tax HEV Market Shift

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