Indus Motor reduces Toyota Yaris prices in Pakistan by up to Rs133,000

Indus Motor Company, the maker of Toyota cars in Pakistan, announced on Thursday a price reduction for its Yaris sedan lineup, with the decrease ranging from Rs73,000 to Rs133,000.

Following this adjustment, Yaris' 1.3 MT LO, 1.3 CVT LO, and 1.3 MT Hi variants will be priced at Rs4.326 million, Rs4.616 million, and Rs4.586 million, respectively, reflecting a Rs73,000 reduction for each model.

The price of the Yaris CVT Hi has been reduced by Rs133,000, bringing its new price to Rs4.766 million.

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According to an industry source speaking to Business Recorder, Indus Motor Company implemented these price cuts to avoid the recently increased 25% sales tax on automobiles priced above Rs4 million.

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As a result of the price reduction, Yaris cars will now fall under the 18% sales tax regime.

The government's decision to raise the sales tax on vehicles -- with engine sizes of 1,400cc and above, as well as those invoiced at above Rs4 million -- from 18% to 25%, has affected the auto industry.

Initially, the tax increase was intended only for cars with engine sizes of 1400cc and above, while all SUVs, including those below 1400cc, were to remain under the 18% tax rate.

However, SUV manufacturers producing vehicles below 1400cc were unsuccessful in avoiding the tax increase and apparently pushed for the inclusion of a Rs4 million price cap. This cap resulted in some Toyota, Honda, and Suzuki models being subject to the increased sales tax regime, added the source.

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Pakistan's auto sector has faced challenges due to high-interest rates and increased production costs, leading to higher car prices and a decline in sales. During the first eight months of fiscal year 2023-24, total car sales dropped to 59,699 units, down 41% from the same period last year, when sales were 101,426 units. Sales in fiscal year 2022-23 also experienced a significant decline, plummeting 56% to just 126,879 units.

Auto sector analyst Usama Rauf from AKD Securities noted that in recent years, overall segment sales have been subdued due to increased prices, reduced consumer purchasing power, and historically high interest rates.

"Even at the start of the new year, Yaris sales remained low, averaging approximately 600 units per month. This figure is significantly lower than the average monthly sales of around 2,000 units in FY21. The factors mentioned have led the company to reduce car prices across the Yaris lineup," he added.