Rise of Hybrid SUVs in Pakistan: A Shift in Automotive Preferences

Key Driver For Popularity

Rising Fuel Prices: With petrol prices reaching unprecedented levels, Pakistani consumers are increasingly turning to hybrid vehicles for their fuel efficiency. Hybrid SUVs offer significant savings by combining internal combustion engines with electric motors, reducing dependency on fuel and enhancing 

Environmental Sustainability: As global awareness of environmental issues grows, many Pakistani consumers are now considering eco-friendly alternatives. Hybrid SUVs, with their reduced emissions, appeal to buyers who wish to minimize their environmental footprint without compromising on vehicle performance.

Performance and Versatility: Modern hybrid SUVs are equipped with state-of-the-art features that go beyond just fuel efficiency. From smart infotainment systems to advanced safety mechanisms like collision warnings and lane-keeping assist, these vehicles cater to tech-savvy buyers who value innovation.

Spacious and Comfortable: Designed with families in mind, hybrid SUVs provide ample interior space, advanced air conditioning systems, and comfortable seating for passengers.

Govt Policy: Tax & Incentives

Concerning hybrids, the government brought nothing influential in fiscal budget 2024-25 and same was the situation in NEV Policy 2024.

Withdrawal of Customs Duty Exemptions: Previously in 2013, hybrid vehicles benefited from a 50% customs duty exemption, effectively reducing import duties by half. However, In the 2024-25 budget, the government eliminated the tax exemption on imported hybrid electric vehicles (HEVs) after 11 years, resulting in a 100% duty on these vehicles.

Continuation of Reduced Sales Tax Rates: Despite the withdrawal of customs duty exemptions, the budget maintains reduced sales tax rates for hybrid vehicles. Specifically, hybrid vehicles with engine capacities up to 1800cc will continue to be taxed at 8.5%, and those between 1801cc and 2500cc at 12.75%.

These rates are set to remain in effect until June 30, 2026, providing some relief to consumers opting for hybrid vehicles within these categories

Increased GST( 8.5% to 25%): As per the “Finance Bill 2024”, clause 73 of the 8th schedule allowing the government to collect 8.5% general sales tax on locally assembled HEVs from “The Sales Tax Act, 1990,” has been omitted. Consequently, the move pushed the CKD HEVs into the general list of vehicles, observing a GST of 25%.

Myths & Misconceptions

Hybrid vehicles are often surrounded by myths or misconceptions that deter potential buyers. Common misconceptions include:

Battery Life and Replacement Costs: Many consumers believe that hybrid batteries have a short lifespan or are expensive to replace. Clarify that modern hybrid batteries often last over a decade and are designed to endure long-term use.

Maintenance Costs: There’s a belief that hybrid vehicles require more maintenance. In reality, hybrids often need less maintenance than conventional vehicles because their electric motor reduces wear and tear on the engine.

Performance: Some buyers think hybrids are less powerful than traditional vehicles. Highlight that hybrid SUVs often combine electric motors and combustion engines for superior torque and efficiency.

Global Trends

The global hybrid cars market is set for significant growth. Valued at USD 203.12 billion in 2023, it’s projected to surge to USD 615.82 billion by 2033, driven by a compound annual growth rate (CAGR) of 11.73% during this period.

The Asia Pacific region is leading the global hybrid car market, capturing a substantial 63% revenue share in 2023. This dominance is attributed to rising environmental concerns and government initiatives in countries like India and China, which are actively promoting hybrid vehicles through supportive policies and incentives.

Globally, markets like the United States, Europe, and Japan have embraced hybrid SUVs for their fuel efficiency, advanced technology, and reduced emissions. Models like the Toyota RAV4 Hybrid and Ford Escape Hybrid dominate in the U.S., while Europe’s strict carbon regulations and Asia’s government incentives drive demand.

Hybrid SUVs serve as a transitional step between traditional vehicles and fully electric vehicles (EVs), particularly in countries like China and India, where charging infrastructure is limited. Automakers such as Toyota, Hyundai, and Ford lead globally, with luxury brands like BMW and Mercedes-Benz entering the hybrid SUV space to meet the demand for eco-friendly premium vehicles.

Challenges and Limitations

While hybrid SUVs have many advantages, there are some challenges too that need to be addressed. First comes high initial costs, hybrid SUVs are often more expensive than their non-hybrid counterparts, making them inaccessible to a large segment of the population.

Moving to another challenge, plug-in hybrid models like the MG HS PHEV face hurdles due to the lack of public charging stations in Pakistan, which also limits their appeal. ]

Meanwhile, battery maintenance concerns come with worries about battery life and replacement costs which also deter some buyers, especially in a market where hybrid technology is still relatively new.

Last but not least, in cities with congested streets and limited parking spaces, larger SUVs can pose practical difficulties, reducing their attractiveness for some urban consumers.

How is this trend impactful?

Reshaping the market: The rise of hybrid SUVs is significantly reshaping Pakistan’s automotive market, creating ripples of change across various aspects of the industry.

As consumer preferences shift towards more sustainable and efficient vehicles, automakers are engaging in fierce competition to capture the hybrid SUV segment.

This competition has spurred innovation, with manufacturers introducing advanced features and cutting-edge technology to attract buyers. The result is a market filled with diverse and improved options, offering greater value to consumers.

Localization efforts: These efforts are another crucial aspect of this transformation. By assembling hybrid models like the Toyota Corolla Cross locally, manufacturers have managed to make these vehicles more affordable and accessible to the average buyer. 

Localization not only reduces costs but also stimulates job creation and skill development within the automotive sector, contributing to the broader economy.

Brings Diversification: Moreover, the hybrid SUV trend has encouraged both traditional manufacturers and new entrants to diversify their offerings. Many companies are now expanding their portfolios to include hybrid and electric vehicles, reflecting a more dynamic and competitive market. 

This diversification ensures that consumers have access to a wide range of options, catering to various needs and budgets, while driving the industry towards a greener future.

Future Prospects

The future of hybrid SUVs in Pakistan looks promising. As technology advances and production costs decrease, hybrid SUVs are likely to become more affordable for middle-income buyers. Automakers are expected to introduce smaller, compact hybrid SUVs tailored to the needs of the mass market. 

Additionally, government incentives and policies promoting hybrid and electric vehicles could further boost adoption. The recently announced NEV Policy 2024 is a testament to this statement.