Honda Atlas says strategic pricing helps buyers benefit from 18% sales tax while supporting demand for its best-selling sedan
KARACHI: Honda Atlas Cars (Pakistan) Limited (HCAR) has revealed that it is deliberately keeping the price of its best-selling Honda City below Rs5 million to enable customers to benefit from the lower 18% sales tax, rather than the 25% rate applicable to higher-priced vehicles.
The disclosure was made during an analyst briefing in which the company’s management discussed its financial performance for MY26 and shared its outlook for Pakistan’s automobile industry.
Honda City strategically priced below tax threshold
Honda Atlas management said the Honda City continues to be priced at approximately Rs4.9 million, allowing it to remain below the Rs5 million threshold that attracts the standard 18% sales tax.
Passenger vehicles priced above Rs5 million are subject to a 25% sales tax, making the pricing strategy a key factor in preserving affordability and sustaining demand for the company’s flagship model.
The company acknowledged that maintaining the City’s price below the tax threshold has affected profitability, with Honda Atlas absorbing part of the increase in production costs instead of passing the full burden on to customers. As a result, gross margins have remained relatively lower than they might otherwise have been.
Vehicle sales record strong growth
Honda Atlas reported a sharp recovery in sales during MY26, with total vehicle sales increasing to 25,621 units, compared with 16,100 units in the previous year.
Management expects the positive trend in Pakistan’s automotive sector to continue, forecasting industry sales growth of around 25% year-on-year during the next fiscal year.
The company said it aims to expand at least in line with overall market growth while continuing to strengthen its market position.
Honda City remains the company’s best-selling model
The Honda City continues to dominate Honda Atlas’ sales portfolio, accounting for around 70% of total vehicle sales.
Within the City range, the 1.2-litre variant contributes approximately 85% of City sales, while the 1.5-litre model represents the remaining 15%.
Meanwhile, the Honda Civic and HR-V each contribute roughly 15% of total company sales. The company also confirmed that the BR-V has been discontinued from its product line-up.
Hybrid vehicles remain the preferred strategy
Discussing future product plans, Honda Atlas said hybrid electric vehicles (HEVs) are better suited to Pakistan’s current market conditions than battery electric vehicles (BEVs).
Under the Automotive Industry Development and Export Policy (AIDEP) 2021–26, hybrid-specific components attract a 4% customs duty, which management expects could increase to 5% under the proposed Auto Policy 2026–31.
The company is also advocating equal tax treatment for HEVs, plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) through uniform customs duty and sales tax policies.
Although Honda Atlas has the technological capability and localisation expertise to manufacture electric vehicles, management said the company currently has no plans to enter the battery electric vehicle segment.
New models and industry outlook
Honda Atlas confirmed that it is developing new products for the Pakistani market but declined to reveal whether these would be facelifts of existing models or entirely new vehicle launches.
The company expects its production utilisation, currently operating at around 52% of installed capacity, to improve over the medium term as production volumes increase and new models are introduced.
Management also highlighted a significant decline in used vehicle imports over the past three to four months, attributing the trend to the discontinuation of the personal baggage scheme and stricter regulations, including restrictions on the transfer of ownership of imported vehicles during the first year after import.
Regarding the government’s proposal to permit the commercial import of used vehicles, Honda Atlas said the policy remains under development and that further details are needed before assessing its potential impact on Pakistan’s domestic automobile industry.